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TMI Blog2017 (5) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... it the issue to the file of the AO for fresh adjudication. It is open for the assessee to furnish all material/evidences to justify its claim that profit worked out as per the chart submitted before us is the income actually attributable to the PE in India. Due opportunity must be given to the assessee to produce any other evidences and material before the AO on this account. The AO is directed to properly consider and examine the submissions of the assessee in the light of the evidences and material brought on record and decide the issue as per law. It goes without saying, the AO must afford reasonable opportunity of being heard to the assessee before deciding the issue. Ground no.2 and 3 are allowed for statistical purposes. Levy of interest u/s 234B for non-payment of advance tax - Held that:- The assessee being a non-resident, the liability is on the payer to deduct tax at source u/s 195 of the Act at the time of payment and there is no liability on the assessee to pay advance tax. This view of ours is supported in the case of Director of Income-tax (International Taxation) v. NGC Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT]. In view of the above levy of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the assessee and held that the assessee has a PE in India, therefore, the business income earned for providing management support services to its subsidiary is taxable in India. It is pertinent to mention here, before the DRP, the assessee had also made alternative claim that in case, it is held that the assessee has PE in India and the fees received from DDIL is taxable, in that case only the profit attributable to the operation in India of the PE is taxable and not the entire management fees. It was further contended, as the assessee has earned profit of 10% on cost, allowance of expenditure at 10% is unjust. The DRP after considering the aforesaid submissions of the assessee though agreed on principle that the income only to the extent attributable to PE is taxable in India, however, held that in absence of any supporting evidences submitted by the assessee regarding activities of its employees in India and details regarding expenses incurred in relation to the fees charged, the entire fees received of ₹ 22.56 crores is attributable to the PE. The DRP further observed that the claim of the assessee that the fees received is on cost Plus 10% mark-up basis is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234B of the Act, amounting to ₹ 36,062,602/- without appreciating the fact that provisions of Section 234B of the Act are not applicable to the Appellant, who being a non-resident, is not liable to pay advance tax under section 208 of the Act since its entire revenues/ receipts are subject to withholding tax in India 3. At the outset, the ld.AR appearing for the assessee submitted that on the instructions of his client he does not want to press ground no.1. Accordingly, ground no.1 along with its sub-ground is dismissed as not pressed. As far as ground no.2 and 3 are concerned, the ld. AR submitted that the assessee has entered into agreement with DDIL for providing management support services at cost plus mark up basis and as per terms of the agreement, it is remunerated at cost + mark-up of 10% for providing management support services to DDIL. Ld.AR submitted, before the DRP assessee had a raised specific objection stating that only 10% of the fees received can be treated as income of the assessee from providing of management support services and after allowing expenditure net income has to be computed. In this context, the ld.AR drew our attention to the relevant clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G x 10/110 (See from India operation objections before DRP and ITAT stay order Profit attributable to PE I=H/E*F 657,833 The ld. AR, therefore, submitted that even assuming that there is a PE, the income which is attributable to the PE and can be assessed at the hands of the assessee is far less than what the departmental authorities have determined. 4. The DR relying upon the observations of the DRP/AO submitted that the assessee having not furnished any supporting evidences before the departmental authorities to substantiate its claim, the determination of taxable income was proper. 5. We have considered the rival contentions and material on record. Since the assessee gave up the issue relating to existence of PE in India as raised in ground no.1, we are proceeding on the footing that the assessee has PE in India. Having held so, the issue remains to be decided is what is the quantum of profit earned by the assessee and what income out of such profit is attributable to the PE in India. It is the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pen for the assessee to furnish all material/evidences to justify its claim that profit worked out as per the chart submitted before us is the income actually attributable to the PE in India. Due opportunity must be given to the assessee to produce any other evidences and material before the AO on this account. The AO is directed to properly consider and examine the submissions of the assessee in the light of the evidences and material brought on record and decide the issue as per law. It goes without saying, the AO must afford reasonable opportunity of being heard to the assessee before deciding the issue. Ground no.2 and 3 are allowed for statistical purposes. 6. Ground no.4 is challenging levy of interest u/s 234B of the Act for non-payment of advance tax. 7. We have heard parties and perused the material on record. The assessee being a non-resident, the liability is on the payer to deduct tax at source u/s 195 of the Act at the time of payment and there is no liability on the assessee to pay advance tax. This view of ours is supported by the ratio laid down by the Hon ble Jurisdictional High Court in the case of Director of Income-tax (International Taxation) v. NGC Netw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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