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TMI Blog2018 (9) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Assessment Years 2004-05 to 2009-10. It is only because the SIEL affected TDS on such Royalty, FTS income, whose benefit was availed by the assessee in the revised returns that no further tax liability was incurred though income escaping assessment got taxed in fresh proceedings. Therefore, we find that this aspect of nonreporting of the receipt of income on account of royalty is a valid ground for the Ld. AO to propose the reopening of the assessment, and it cannot be said that there was no escapement of income merely because tax was deducted at source on such income. - Decided against assessee. - ITA 969/2018 & CM Nos.35890-91/2018 - - - Dated:- 4-9-2018 - MR. SANJIV KHANNA AND MR. CHANDER SHEKHAR JJ. Appellant Through: Mr. Bhuwan Dhoopar, Advocate Respondent Through: Mr. Ruchir Bhatia, Advocate SANJIV KHANNA, J. (ORAL): The afore-captioned appeal under Section 260A of the Income Tax Act, 1961 (the Act, for short) has been filed by Samsung Electronics Co. Ltd., a non-resident company and resident of Republic of South Korea. The appeal relates to Assessment Year 2007-08 and impugns a common order dated 22nd March, 2018 passed by the Income Tax Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded. (i) B D Park, Director Mobile Biz IT Biz (ii) Sachin Baweja, Company Secretary (ii) C S Choi, Vice President, Corporate Marketing (iv) Y H Cho, Vice President, Sales, North Region (v) HK Seo, Vice President, CE Sales Marketing (vi) J H Kyung, Director, CEO A close analysis of these statements further reveals that: (i) There is no evidence in the minutes of the board meetings showing any important policy decisions being taken by the board members in India. (ii) The Indian company has to regularly update the reasons for ageing stock to the parent company. The parent company regularly overviews the performance of the Indian company. (iii) The team at Indian company collects information from Indian consumers and sends that information to the parent company so as to develop Indianised Product e.g. two vegetable boxes in refrigerators, sound focused LCD TVs and Semi Automatic Washing Machines are some of the products which has been Indianised by the parent company on the request of the Indian company. (iv) Samsung Korea has different Global Business Managements (GBMs) to look after the different categories of products. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal services was payable. Use of the brand name samsung by the Indian subsidiary in trading and sales on which royalty was payable to the appellant is not denied. The Indian subsidiary had substantial turnover of more than ₹ 8,000 crores and royalty payable @ 2% of sales would approximately be ₹ 160 crores. Turnover as recorded is not disputed and challenged. Another aspect recorded in the reasons to believe had emerged from the statements of officers of the Indian subsidiary recorded during the survey operations and inquiries made thereafter. The statements had revealed that the Indian subsidiary had also covered operations in Bangladesh, Sri Lanka, Nepal, Bhutan and Maldives for which no extra or additional payment was made. Facts as then ascertained and known were highlighted in the reasons and grounds to hold that the appellant had permanent establishment in India. 6. It was submitted that the reasons to believe had erroneously recorded that the appellant had failed to file their return of income, whereas the returns had been duly filed. At the same time, it is accepted that the returns were filed by the branch office of the appellant under the name of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income by way of royalty and fee for technical services. 9. The contention that Tax at Source had been deducted on royalty and fee for technical services would not matter, as the returns filed were wrong and required a correction and modification. Failure to disclose fully and truly all material facts, without debate is correct and established. Deduction of tax at source would not matter, as the return of income by the branch office was not filed in terms of the provisions of the Act to include income of the appellant and, therefore, the Revenue did not have any opportunity to examine and consider the taxable income of the appellant. Deduction of tax at source and failure to disclose taxable income are different and distinct aspects. Escapement and short levy of tax has to be objectively and reasonably estimated by the Assessing Officer at the stage of recording of reasons. This was done and objectively ascertained as is clear from the reasons to believe recorded which refer to the turnover and sales of the Indian subsidiary. In Assistant Commissioner of Income Tax v. Rajesh Jhaveri stock Brockers Private Limited (2007) 291 ITR 500 (SC), it was observed that at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Income 180,897,736 9,894,848 190,792,584 AY 2006-07 MAT paid on Book Profits (13,10,35,049) u/s 115JB 229,261,833 10,722,431 239,984,264 AY 2007-08 NIL (operations ceased to exist) 354,257,732 44,789,046 399,046,778 AY 2008-09 NIL (operations ceased to exist) 564,889,589 57,863,051 622,752,640 No return filed AY 2009-10 (Branch was closed) 727,560,470 80,918,894 808,479,364 AY 2011-12 1,480,742,857 N.A. 84,758,114 1,565,500,971 AY 2012-13 1,976,164,087 N.A. 111,836 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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