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TMI Blog2016 (4) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... A) are as under :- 3.1. Americom Asia Pacific LLC (hereinafter referred to 'the assessee') is a tax resident of the USA. AAP provides "transmission services" through satellites under contracts entered into with various parties around the world. During the year under consideration, assessee was the legal owner of a satellite AAP-l which is a high-power, all Ku-Band FSS satellite with coverage of China, North-East Asia, the Philippines and South Asia including India. 3.2. During the year under consideration, the assessee provided data transmission services to Antrix Corporation Limited (' Antrix '), the commercial arm of Indian Space Research Organisation ('ISRO'), a Government of India company. Antrix sells these se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies for use of process as well as equipment falling within the ambit of section 9(1)(vi) of the Act and article 12 of the India-USA DTAA. It was further held that the assessee has a fixed place PE in India in the form of an office in New Delhi and a master control facility at Hassan in South India. Furthermore, that the customer of the assessee constitutes dependent agent PE of AAP in India as per the provisions of Article 5(4) of India US DTAA. Consequently, income was assessed at Rs. 7,05,24,639/- taxable under Article 12 of the India-USA DTAA as being royalties. On the aspect of income attributable to PE, it was held that income would be such on which tax would come to be 15% of gross receipts. Hence, the total income was subject to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order in this case was passed on 19.12.2008 under section 143(3) read with section 263 of the IT Act, 1961 wherein the Assessing Officer has held that the payment received by the assessee is covered by the provision of Royalty income as defined both under the Act and the DTAA. The assessee has a fixed place permanent establishment in India and income of the assessee would also be taxed as business income under Article 7(2) of the DTAA. And in the absence of the figure attributable to the PE a tax @ 15% on the gross receipts was levied. It is perused from the record that while deciding the tax rate the date of execution of the agreement with the PE was not taken into account which resulted into an underassessment of the income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 1 Lakh has escaped assessment, therefore, the notice under section 148 read with section 147 of the IT Act, 1961 satisfies the time limit for issue of notice as provided in section 149 of the Act. " 3.5. In response to the above reasons recorded, the assessee filed its objections vide letter dated 19.12.2011 which were disposed off vide an order dated 23.12.2011. Subsequently, a draft assessment order was passed retaining the conclusions regarding the characterization of receipts in the hands of the assessee as 'royalties' and that the assessee has PE in India as held vide order u/s 263 r.w.s. 143(3) dated 19.12.2008. However, it was held that since the agreement between the assessee and Antrix Corporation was entered on 21.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be satisfied before issuance of the notice u/s 147/148 of the Act, which is absent in this case, so the ld. CIT (A) has rightly quashed the reassessment proceedings being one initiated by the AO without satisfying the jurisdictional requirement before initiating the reassessment itself. So he does not want us to interfere in the impugned order of the ld. CIT (A). 8. We have heard both the parties and perused the records. Further, there is no dispute as to the fact that notice for reopening was issued four years after end of the relevant assessment year, so 1st Proviso to section 147 needs to be satisfied before issuance of notice u/s 147/148. For ready reference, 1st Proviso to section 147 is reproduced below :- "Provided that wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessment year, it is necessary that conditions no.(i) and either of conditions no.(ii)(a) or (ii)(b) must co-exist. In case, any of the said two conditions is not satisfied, the very initiation of proceedings u/s 147 of the Act shall be wholly without jurisdiction. There are a plethora of judgments on this issue. 8.1 We concur with the ld. CIT (A) that there is no whisper / allegation that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. The AO himself admits that while perusing the records of the relevant assessment year, he came across the date of execution of agreement with the PE and that he has not taken into consideration that fact while deciding the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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