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TMI Blog2015 (5) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... s clear that the asessee was not having fixed place of business in India. FAA had rightly held that provisions of said Articles i.e.5(1)were not applicable. - Decided in favour of assesse. Whether particular articles of the Agreement of the Avoidance of Double Taxation between India and Netherlands were applicable or not? - None of the receipts comprising in total amount of ₹ 1,30,21,079/-, is taxable in India as held by CIT(A) - hHeld that:- The agreements entered into by RI with outsiders and the agreements entered in to by RI with the asessee have to examined to understand the real nature of the transaction.It also appears that some material was made available to the FAA,but it is found that he did not call for a remand report from the AO in that regard.The role of expatriate Director deputed to India has not been inquired in to.What were his duties and what function actually he had performed,is not known. Similarly, the circumstances in which guarantee commission was paid by RI to the asessee are not discussed by the FAA.The circumstances,under which RI for approached the asessee which entitled it to get roughly one third of the commission,are not known.In short,the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case and in law, the ld. CIT(A) erred in deleting the addition made of ₹ 1,50,75,790. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. ITA No. 5056/Mum/2010-AY-2005-06 1. Whether on the facts and the circumstances of the case and in law the CIT(A) erred in holding that the assessee did not have a Permanent Establishment in India. 2. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer restored. 3. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2.Assessee,an Association of Persons (AOP),is a co-operative Membership Institution established in the Netherlands and is a part of Rabo Bank Group Worldwide.The details of dates of filing of returns,returned incomes,dates of assessment orders and assessed incomes,for the above mentioned Assessment Years can be summarised as under: AY.s. Return filed on Returned I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Branch of the assessee. For the services rendered by the assessee,an amount of ₹ 4.37 Lakhs was received from RI.It was also found that Utreche(Netherlands) Branch of the assessee had allocated 1 Million US$, on 11.02.2000,to RI in favour of M/s Banner Pharma Caps (India) Pvt. Ltd.,in the form of working capital facility and the guarrantee/indemnity fee.On 22.02.2000 the same branch of the assesseee allocated further 1 Million US$ to RI for the same client and for the same facility.On both the occasions guarantee/indemnity fee was mentioned at 5/8 of the margin received.Thus, the assessee received ₹ 19.30 lakhs (4.37+15.73 lakhs).It was further found that the assessee had claimed that it had received certain amounts(Rs.85.04 lakhs)that were treated as reimbursement of expenses, that it included repayment of storage charges and the said sum was paid by Lanyard Foods Ltd.On behalf of the Singapore Branch of the assessee reimbursement of training expenses of the employees of RI, amounting to ₹ 73,890/- was also received.As per the AO, the assessee had not furnished the copy of the agreement with regard to the transaction which led to the recovery of storage charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have a PE in India,that the concept of fixed place PE required the enterprises to have fixed place of business of India or to have a place of management India/have a branch in India/or an Office in India,that the assessee had not office/branch/place of management/fixed place of business of India, that the activities of RI did not result in constitution of Agency PE of the assessee,that RI did not have any authority to conclude contract on behalf of the assessee,that it did not maintain any stock of any goods/ merchandise of the assessee,that it did not secure orders on behalf of the assessee,that it was economically and legally independent,that it was acting in ordinary course of its business and was not dependent on the assessee, that during the year under appeal RI had income from various sources amounting to ₹ 1386.73 Millions, that the assessee had received professional income and guarantee commission amounting to ₹ 20.74 Lakhs and 23.68 Lakhs respectively from RI, that in totality it was .32% of income earned by RI, that there was also certain reimbursements of expenses by RI to the assessee, that the income earned by the assessee was a very miniscule percentage o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and RI proved that RI had not acted agent of the assessee, that loan was advanced by RI, that to safeguards its own financial interests RI had entered into an agreement with the assessee requiring it to stand as guarantor on payment of guarantee commission,that RI had not at all acted as agent of the assessee, that deputing of an expatriate Director by the assessee to RI did not make an RI and agency PE of the assessee,that RI was an independent organisation.With regard to amount collected by RI on behalf of Rabo Singapore,the FAA held that perusal of the order of the DRAT,letters of various authorities and the bank account of RI proved that RI had collected the payment from DRAT on behalf of its counter part of Singapore and thereafter remitted it to Singapore,that there was no income element involved in transfer of funds,that the AO had incorrectly added the amount in question as part of the income of the assessee.He further held that the business profits of the assessee were not taxable in India in view of Article 7(1) of the DTAA,that the AO had held that entire receipt were in nature of business income, that in the absence of a PE in India, if any, business income was ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king of RI, the correspondence between RI and the asessee and the mode of their functioning and operations would have to be examined in toto. The quantum of work done,the services rendered, the contracts undertaken for outsiders would have to be examined to determine whether RI was an agent having independent status or was merely working on behalf of the asessee,as alleged by the AO. In absence of such basic material facts,it is not possible to come to a conclusion as to whether the asessee had PE in India or not. There is no material available on record to prove as to whether RI had significant independent activities on its own or not.The FAA,while allowing the appeal has dealt with the DTAA and held that provisions of Article 5 (1)5(2)of DTAA of Indo-Netherland were not applicable.But,he has not discussed the actual work and the nature of the job done by the asessee for RI nor has he given the reasons as to how he arrived at the said conclusion.In our opinion, the assertion-that advisory services were rendered or that guarantee commission was received for the job outside India or that RI was rendering services independently in itself-is not sufficient to prove or disprove the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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