9911796707
TMI Blog2018 (6) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's arguments on the issue and further, the assessee had failed to furnish the relevant information to the A.G.. 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in law in holding that interest u/s 234B was not chargeable in the assessee's case, by relying upon the decision of Hon'ble Delhi High Court dated 30.08.2010 in the case of DIT Vs Jacobs Civil Incorporated without appreciating that the levy of interest u/s 234B is mandatory as held in the case of CIT Vs Anjum M. H. Ghaswala & Other 252 ITR 1 (SC). 4. The appellant prays for leave to add, amend, modify or alter any grounds of appeal at the time or before the hearing of the appeal. I.T.A .No. 5373/DEL/2014 1. "On the facts and in the circumstances of the case and law, Ld CIT(A) has erred in deleting the addition without appreciating that the AO had given detailed reasons in paras 7 and 8 of the assessment order for rejecting the Assessee's arguments on the issue and, further, the Assessee had failed to furnish the relevant information to the AO. 2. On the facts and in the circumstance of the case and law, Ld CIT(A) has erred in holding that interest u/s 234B of the Act was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been offered for tax as per section 44D r.w.s 115A on gross basis @ 20%. (b) Projects for which agreement were entered into after 01-04-2003, for which income has been offered for tax as per section 44DA on net basis. 4. The AO held in assessment order that nature of services rendered by the assessee is FTS for all the above mentioned projects. In respects of projects executed through branch office for which agreements were entered into after 01-04-2003, the AO held that FTS from such projects are not effectively connected with PE i.e. branch office and hence provisions of section 44DA shall not apply and such FTS shall be taxable on gross basis as per section 115A @ 10% instead of being taxable on net basis as claimed by the assessee. 5. Being aggrieved by the Assessment Order the Assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 6. As relates to Ground No. 1 and 2 for A.Y. 2008-09 appeal and Ground No. 1 for A.Y. 2009-10 & 2010-11, the Ld. DR submitted that the assessee has not furnished project wise details of its employees for contracts executed by the branch office and no other data in respect of employees presence in India was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Article 5(2)(b) of the India Netherlands DTAA. Further, the income earned by the assessee under the contracts in dispute is "effectively connected" to the PE since the projects were carried out in India by DHV India branch office as it was involved in negotiation, signing of the consultancy contracts and also execution of such contracts in India through the consultants viz, DHV India Private Limited. The Ld. AR submitted that the Assessee submitted information/ documents such as a copy of the affidavit of DHV BV India Branch Office, which clearly brings out that all the contracts in dispute have been executed in India by the Branch office and its consultants with minimal involvement of Head office. The assessee also submitted copy of Power of Attorney in favour of Mr. M S Prakash to negotiate and sign the contracts on behalf of DHV BV branch office along with Consultancy contracts which was signed by Mr. M S Prakash on behalf of DHV BV branch office. The assessee also submitted copy of invoices raised by DHV BV branch office on its clients for consultancy services under various contracts, Copy of the financial statements of the DHV B V branch office reflecting consultancy r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me spent by the assessee itself. The Ld. AR relied on the OECD's commentary on Article 5 of OECD Model Tax Convention on Income and on Capital (dated 22 July 2010) as well as US Model Technical Explanation where it also provides that in calculation of general contractors period, sub-contractors period needs to be aggregated. The Ld. AR further submitted that the activities under each of the aforesaid contract were rendered in India for more than 6 months. To substantiate the same, details of personnel and their duration of activity were submitted by the Assessee which clearly shows that the contracts are required to be rendered for substantially long period of time. This shows that the scope of work was required to be rendered in India and the time spent in India by the assessee/sub-contractor proves beyond doubt a PE was constituted in India. Hence, income earned by the assessee under such contracts is "effectively connected" to a PE in India and is liable to be taxed at 40% on net income basis as per RBI rates. Therefore, the appeal filed by the department against the order of the CIT(A) was prayed to be quashed. 11. As regards to Ground No. 3 for A.Y. 2008-09 and Ground No. 2 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making remittances to them. The Ld. AR also relied upon the following decisions of the various High Courts and Tribunals: * D1T v. Maersk Co. Ltd.: 334 1TR 79 (Uttrakhand IIC) * DIT Vs. Jacabs Civil Incorporated: 330 ITR 578 * Motorola Inc. (96 TT.I 1) (Del.)(SB) * Sedco Forex International v. DCIT, Delhi (72 ITD 415)/186 CTR 144 (Del.) * Asia Satellite Ltd. (1TA No.l66/Delhi/2001) * Rheinbraun Engineering & Wasser GmbH (1915/Bom/96) wherein it has been held that the interest for non-payment of advance tax could not be levied on the assessee under section 234B of the Act, since all payments made to the assessee were subject to tax deduction at source, or and therefore, the assessee was not liable to pay any advance tax, even if the payer had not actually deducted tax at source. Thus, the Ld. AR submitted that no interest u/s 234B of the Act was leviable for the above reason since the entire payment received by assessee from India, was subject to deduction of tax at source on the said payment. 13. We have heard both the parties and perused all the relevant records available before us. As regard to Ground Nos. 1 and 2 for A.Y. 2008-09 appeal and Ground No. 1 for A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, there cannot be any other conclusion that the contract is effectively connected with branch office in India. In view of discussion supra, I hold that contracts under dispute in present appeal are effectively connected with PE in India. The AO is directed to tax income these contracts on net basis as per provisions of section 44DA. The ground of appeal is accordingly allowed." It is pertinent to note that all the documents especially contract agreements of the relevant period were produced before the Assessing Officer by the assessee. Despite that the Assessing Officer has overlooked the said documents and has given an incorrect finding that the assessee has not submitted the documents. The activities under each of the contract were rendered in India for more than 6 months which was not disputed by the Revenue. The details of the personnel and their duration activity shows that the contracts are required to be rendered for substantially long period of time which supports the case of the assessee that the scope of work was required to be rendered in India and the time spent in India by the assessee/subcontractor proves that a Permanent Establishment (PE) was constituted in In ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
