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TMI Blog2018 (9) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... terest inadvertently levied under Section 234A and the same was reduced to Nil. Further, interest under Section 234B, 234C, 234D & 244A are consequential in nature. Hence, Ground allowed for statistical purpose. - ITA No. 6787/DEL/2017 - - - Dated:- 11-9-2018 - SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER Appellant by : Sh. Kanchan Kaushal, Adv Respondent by : Sh. G. K. Dhall, CIT DR ORDER Per Suchitra Kamble, JM This appeal is filed by the assessee against the order dated 26/09/2017 passed by ACIT, Circle-2 (1)(2), International Taxation u/s 144C (13) read with Section 143(3) of the Income Tax Act, 1961. 2. The grounds for appeal are as under:- 1. Under the facts and circumstances of the case and in law, the Learned Dispute Resolution Panel ( Ld. DRP ) and Learned Assessing Officer ( Ld. AO ) has erred in passing the assessment order without giving due consideration to the submissions of the Appellant. 2. Under the facts and circumstances of the case and in law, the Ld. DRP and Ld. AO has erred in holding that Appellant has a service Permanent Establishment ( PE ) in India within the meaning of Article 5 of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. DRP and Ld. AO thus grossly erred in determining the taxability applying arbitrary mechanism under Rule io(iii) of the Income tax Rules, 1962 and ignoring the principle of apportionment as laid down under Rule io(ii) of the Income tax Rules, 1962 which is consistent with the provisions of Article 7(3) of the DTAA between India and UK. 6. Under the facts and circumstances of the case and in law, without prejudice to the above grounds, the Ld. DRP and Ld. AO has failed to appreciate that the Indian company i.e. JCB India is a profitable company and as long as the same is earning profit at arm s length, no further attribution is possible even in case of an alleged PE. 7. Under the facts and circumstances of the case and in law, the Ld. DRP and Ld. AO has erred in not following the Hon ble Income Tax Appellate Tribunal order in Appellant s case for AY 2006-07 where it has been held that Royalty earned by the Appellant is not effectively connected to alleged service PE of the Appellant in India. 8. Under the facts and circumstances of the case and in law: 8.1 the Ld. A.O has erred in levying interest u/s 234B of the Act. 8.2. The Ld. A.O erred in g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h an exclusive right to manufacture and market the 'Excavator Loader (P-92 version) in the territory of India under the brand name 3DX. On October 21, 2010, JCBE and JCB India entered into another Technology Transfer Agreement pursuant to licence the knowhow and related technical documents consisting of all drawings and designs with an exclusive right to manufacture the 'Backhoe Loader (P106) in the territory of India. JCBE and JCB India had also entered into an IPAA dated December 5, 2005 pursuant to which JCBE sent some of its employees on deputation to JCB India to manage the overall operations of JCB lndia. On December 17, 2007, JCBE, JCB India and JC Bamford Investments Limited (hereafter JCB) entered into an Intellectual Property Agreement ('IPA') pursuant to which the head licence (pertaining to TTA) under its intellectual property to manufacture and market 3DX was transferred by JCBE to JCBI in consideration of the payment of royalty by JCBI to JCBE. In other words, JCBE licensed its technology to JCBI which in turn sub-licensed it to JCB India. This sublicensing was duly authorised by Clause 2.2 of the 1PA. Further, with effect from July 1, 2011, JCBI had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. Ground No. 1 is general in nature hence dismissed. As regards Ground No. 2, 3, 3.1, 3.2, and 3.3 in assessee s own case for A.Y. 2006-07 as well as 2012-13, the Tribunal dismissed these grounds. The relevant extract of the Tribunal s decision for A.Y. 2012-13 are as under: 6. After considering the submission of the assessee both the parties agreed before us that there is no change in the facts and circumstances of the case compared to the AY 2006-07 wherein, this issue has been decided against the assessee in the preceding year vide aforesaid referred to order dated 14.03.2014 wherein relevant findings have been given in para 7 which read as under: 7. It is thus seen that all the requisite conditions for attracting the mandate of Art. 5(2)(k)(i) stand satisfied inasmuch as I, there is furnishing of services including managerial services; ii. Such services are other than those taxable under Article 13 (Royalties and fees for technical services); iii. Such services are rendered within India; iv. Such services are rendered by the assessee through its employees; and v. such activities continued for a period of more than ninety days within twelve months period. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee arises out of IP Rights which are in the nature of right or property but the same cannot be considered under para 6 of Article 13 because it is not effectively connected with the service PE of the assessee in India. 18 11. Therefore, respectfully following the aforesaid decision regarding whether royalty is effectively collected to the PE of the assessee is decided in favour of the assessee Thus, the issue is squarely covered in favour of the assessee as the facts are identical in the present assessment year. Therefore, Ground No. 4, 5 7 are allowed. 9. The Ld. AR further submitted that Ground No. 6 has to be set aside in light of Tribunal s decision in the assessee s own case for A.Y. 2006-07 and 2012-13 and also in light of appeal effect order dated 16th December 2016 for Assessment Year 2006-07. 10. The Ld. DR relied upon the Assessment Order. 11. We have heard both the parties and perused all the relevant material available on record. Ground No. 6 regarding attribution of income has already decided in assessee s own case for A.Y. 2006-07 as well as 2012-13, the Tribunal set aside this issue to the file of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, interest under Section 234B, 234C, 234D 244A of the Act are consequential in nature. 13. The Ld. DR relied upon the Assessment Order. 14. We have heard both the parties and perused all the relevant material available on record. As relates to Ground No. 8 and 9, the assessee moved a rectification application under Section 154 of the Act before the Assessing Officer for granting complete credit of Tax Deducted at Source (TDS) and to rectify the interest inadvertently levied under Section 234A of the Act. Accordingly, the Assessing Officer passed the rectification order wherein complete credit of TDS was granted to the assessee and consequential interest under Section 234B of the Act was accordingly rectified. Also, the Assessing Officer rectified the interest inadvertently levied under Section 234A of the Act and the same was reduced to Nil. Further, interest under Section 234B, 234C, 234D 244A of the Act are consequential in nature. Hence, Ground No. 8 and 9 are allowed for statistical purpose. 15. As regards Ground No. 10, the Ld. AR submitted that the Assessing Officer erred in initiating penalty proceedings under Section 271(1)(c) of the Act for furnishing inacc ..... 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