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TMI Blog2020 (11) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... vices do not fall within the ambit of Fee for Technical Services as defined in DTAA. Thus, ground No.13 to 15 and 19 to 25 read with ground nos. 8 to 12 of the grounds of appeal are decided in favour of the assessee. Whether the assessee has PE in India and the receipts are liable to be taxed as Business Profits ? - HELD THAT:- A perusal of the draft assessment order and the assessment order shows that the assessee had furnished the details before the AO. However, the same were not examined by the Assessing Officer. The Co-ordinate Bench in assessment year 2013-14 in principle has accepted the contention of the assessee that if the employees/personnel of the assessee have not rendered services in India for a period exceeding 90 days during the relevant period then it has to be held that the assessee did not have a PE in India during the year under consideration. In principle we are inclined to decide the issue in favour of the assessee. However, for the purpose of factual verification of the employees stay in India during the relevant period, the matter is remanded to the Assessing Officer. The Assessing Officer after asserting the same shall decide the issue, accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India UK DTAA? (iv) Whether the assesse has permanent establishment (PE) in India? 2.2. The ld. Counsel submitted that the issue whether the assesse would be eligible to claim the benefit of India-UK DTAA was considered by the Tribunal in AY 2011-12 in ITA No. 1690/Mum/2015 decided on 31-01-2017. The Tribunal held that the assesse is entitled to claim benefit under DTAA. 2.3. The ld. Counsel for the assessee submitted that in the assessment years 2011-12, 2012-13 and 2013-14 additions for similar reasons were made in the hands of the assesse. The revenue has been consistently holding legal fees charged by assesse as FTS . The assessee carried the issue in appeal before the Tribunal in ITA No.1690/Mum/2015 (supra). The Tribunal held that the income of the assesse does not fall within the ambit of FTS as defined in Article 13 of India-UK DTAA. Thereafter, in subsequent AYs the Tribunal has been consistently taking same view. 2.4. The ld. Counsel asserted that the income of assessee is neither taxable under the head Business Income , as the conditions set out in Article-7 of the DTAA are not satisfied. The assesse has no PE in India. Article 5 of the DTAA defines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. The issue can be restored to Assessing Officer for verification. 4. We have heard the submissions made by rival sides and have perused the orders of authorities below. The assessee in appeal has raised as many as 39 grounds of appeal. The ld. Counsel for the assessee stated at the Bar that the effective grounds for the purpose of adjudication of the appeal would be 8 to 25 and 30 to 33 of the grounds of appeal. The other grounds i.e. ground No.1 to7, 26 to 29 and 34 to 39 are either general in nature or are in support of the main grounds mentioned above. 5. The effective grounds argued by the ld. Counsel for the assessee are concised and grouped together as under: A. In ground No.13 to 15 the assessee has assailed assessment order in denying the benefit of India- UK Tax Treaty to the assessee. B. In ground No.16 to 18 the assessee has assailed the finding of Assessing Officer in holding that the assessee is having PE in India within the meaning of Article-5 of India UK DTAA. C. In ground of appeal No.19 to 25 read along with ground No.8 to 12 of grounds of appeal, the assessee has assailed the findings of Assessing Officer in treating the remunerations receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a UK Tax Treaty. 14. The learned Sr. Counsel for the assessee submitted, identical issue arose in assessee s own case for the assessment year 2012 13 and the Tribunal while deciding the issue has held that benefit under India UK Tax Treaty is available to the assessee. 15. The learned Departmental Representative, though, agreed that the issue has been decided in favour of the assessee by the Tribunal in assessment year 2012 13, however, he relied upon the observations of the Assessing Officer and learned DRP. 16. Having considered rival submissions it is noticed that identical issue came up for consideration before the Tribunal in assessee s own case for the assessment year 2012 13 in the order cited supra. While deciding the issue, the Tribunal has held as under: 8. We have considered rival submissions and perused materials on record. Undisputedly, the Assessing Officer relying upon his observations in the preceding assessment year held that the assessee is not entitled to the benefit of India UK DTAA as it is not required to pay tax in UK. Further, the Assessing Officer also held that the income received by the assessee is otherwise taxable as FTS both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x by applying the provisions of section 9(1)(vii) of the Act, since, the assessee is entitled to claim the benefit of India UK DTAA. In view of the aforesaid, grounds no.6 and 7 are allowed and the issues raised in ground no.5 having become redundant will not require adjudication. 17. Facts being identical, following the aforesaid decision of the Co ordinate Bench, we decide the issue in favour of the assessee. 7.1. Thus, the Tribunal in a very categoric manner has held that the provisions of section -9 relating to Fee for Technical Services does not apply to the case of assesse, hence, the assessee is entitled to the benefit of DTAA. The Revenue has not been able to place on record any contrary material. Further, no material has been placed before us to show that the nature of transaction in the assessment year under appeal is different from the transactions in assessment year 2013-14. Respectfully following the decision of the Co-ordinate Bench, we hold that the provisions of India-UK DTAA would override the provisions of the Act in the instant case and the remuneration received by the assesse for providing legal services do not fall within the ambit of Fee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid issue, the Tribunal has held as under: 14. We have considered rival submissions and perused materials on record. Undisputedly, the issue raised in this ground was never agitated by the assessee either before the Assessing Officer or before the DRP. Thus, this ground raised by the assessee has to be treated as an additional ground. However, considering the fact that the issue raised in this ground is a purely legal issue, since, it involves interpretation of Article 5(2)(k)(i) of the India UK DTAA, we are inclined to admit this ground. Reverting back to the issue raised in this ground, it is observed that the Assessing Officer referring to Article 5(2)(k)(i)of the India UK DTAA has concluded that the assessee had a PE in India, since, its employees or personnel have rendered services in India for a period of 90 days or more within any 12 month period. Notably, the expression any 12 month period as used in Article 5(2)(k)(i) of the India UK DTAA has not been defined anywhere in the DTAA. Therefore, we have to find the meaning of the said expression by taking aid of the provisions of the Income Tax Act, 1961, since, the income is sought to be taxed in India. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the employees/personnel of the assessee were situated in India for rendering services for a period not exceeding ninety days during the previous year relevant to the assessment year under dispute and if it is found to be so, then, it has to be held that the assessee did not have a PE in India during the year under consideration. This ground is allowed subject to factual verification as indicated above. In the light of above, in principle we are inclined to decide the issue in favour of the assesse. However, for the purpose of factual verification of the employees stay in India during the relevant period, the matter is remanded to the Assessing Officer. The Assessing Officer after asserting the same shall decide the issue, accordingly. The ground No.16 to 18 of the appeal are allowed for statistical purpose in the terms aforesaid. Applicability of Article 15 of India-UK DTAA: 9. The assesse has challenged the findings of the Assessing Officer in holding that the assesse being partnership firm does not have separate legal entity and hence, its income can be brought to tax under Article-15 of the India UK DTAA. We find that this issue was also subject matter of appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Linklaters (for AY 1995-96) wherein the Tribunal held at para 106 of the order that Article 15 shall be applicable only when services are rendered by an individual. Thus, respectfully following the order of the Tribunal it is held that impugned amount of fee received by the assessee would not be liable to be taxed under Article 15 of India-UK DTAA. Thus, Grounds 10 to10.5 are allowed in favour of the assessee. 24. Facts being identical, respectfully following the aforesaid decision of the Co ordinate Bench, we hold that the income received by the assessee will not be taxable under Article 15 of India UK DTAA. This ground is allowed. 22. Facts being identical, respectfully following the aforesaid decision of the Tribunal, we hold that income received by the assessee will not be taxable under Article 15 of the India UK Tax Treaty. This ground is allowed. The Tribunal after following the orders of earlier years held that the provisions of Article 15 of India-UK DTAA would not apply to the assesse. Since, the facts in the assessment year under appeal are similar, we see no reason to take a divergent view. Following the order of Tribunal in assessee s own case in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made timebound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which ITA No. 6103 and lockout was in force is to excluded for the purpose of time limits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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