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TMI Blog2017 (11) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... se without physical presence by way of virtual modes like e mail, internet, video conference etc. and therefore, physical presence of employee is not essential. Because of these differences in facts, this tribunal order cited by the learned DR of the revenue is not applicable in the present case. We, therefore, follow the tribunal order cited by the learned AR of the assessee having been rendered in the case of Clifford Chance vs. DCIT (2001 (9) TMI 1141 - ITAT MUMBAI) and hold that in the present case, the stay in India of the assessee was only 90 days and since it is less than 182 days as required under Article 5 (3) (b) of the India SA DTAA, there is no PE. Whether the impugned receipt is Royalty or FTS? - Held that:- There are some e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eunder are independent of and without prejudice to one another. The Appellant submits as under: 1 . Holding the payments received by the appellant as royalty under the Income-tax Act, 1961 ( Act') and under the Double Taxation Avoidance Agreement between India and Saudi Arabia ( DTAA') On the facts and in the circumstances of the case, the learned Assessing Officer ( AO') erred in law and facts in holding and the learned Dispute Resolution Panel ( DRP') erred in law and facts in confirming the fees received by the appellant for services rendered as royalty under the Act and the DTAA and accordingly taxing the fees under section 115A of the Act. 2. Holding that where there is no specific Article for taxabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Penalty proceedings under section 271(1)(c) The learned AO has erred in initiating penalty proceedings under section 271(1)(c) of the Act. 6. Relief a) The appellant prays that directions be given to grant all such relief arising from the above grounds and also all relief consequential thereto. b) The appellant craves leave to add to or alter, by deletion, substitution, modification or otherwise, the above grounds of appeal, either before or during the hearing of the appeal. c) Further, the appellant prays that all the above adjustments / additions / disallowances made by the learned AO and upheld by the learned DRP are bad in law and liable to be deleted. 3. Learned AR of the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , consultancy, management etc. can be provided with various virtual modes like e mail, internet, video conference etc. and therefore physical presence of employee is not essential. 4. We have considered the rival submissions. We have to decide this issue first that whether there is PE or not in India because if a PE is there, income is taxable @ 40% and if no PE is there, income whether Royalty or FTS is taxable @ 10%. In our considered opinion, there is no PE because as per the tribunal order cited by the learned AR of the assessee having been rendered in the case of Clifford Chance vs. DCIT (Supra), only solar days are to be considered and not man days. The decision of tribunal is this: Multiple counting of the common days is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present case. We, therefore, follow the tribunal order cited by the learned AR of the assessee having been rendered in the case of Clifford Chance vs. DCIT (Supra) and hold that in the present case, the stay in India of the assessee was only 90 days and since it is less than 182 days as required under Article 5 (3) (b) of the India SA DTAA, there is no PE. 5. Now the second issue to be decided is this that whether the impugned receipt is Royalty or FTS and the third issue to be decided is this that whether the income is taxable in India if it is FTS. If it is found that the income is taxable even if it held to be FTS than the second issue will be of academic interest only because both these incomes i.e. Royalty FTS are taxable at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- Article 22 Other Income 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this convention shall be taxable only in that contracting State. 7. There are some exceptions provided in Article 22 (2) where Article 22 (1) is not applicable but those exceptions do not include FTS. Therefore, we are of the considered opinion that in view of Article 22 (1) of DTAA between India Saudi Arabia, FTS is not taxable in India because it will fall in Article 22 (1) and as per this Article, income is taxable in the state of residence i.e. Saudi Arabia. 8. Now, we have to decide the second issue as to whether the impugned receipt is Royalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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