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TMI Blog2022 (2) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... ent And Saktijit Dey , Member ( J ) For the Appellant : Sanjay Kumar , Sr. DR For the Respondents : Satyajeet Goel , CA ORDER Per Saktijit Dey , JM This is an appeal by the Revenue against order dated 27.10.2016 of learned Income Tax Commissioner (Appeals), New Delhi, for the assessment year 2012-13. 2. The only effective ground raised by the Revenue reads as under: 1. On the facts and in the circumstances of the case, whether Ld. CIT(A) has erred in holding that the income of the assessee from contracts entered into on or after 1st April, 2003 are effectively connected to the PE of the assessee and 'not FTS' and liable to tax on net basis as per provisions of section 44DA of the Act. 3. Briefly st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called upon the assessee to explain, why the receipts from India should not be taxed as fees for technical services (FTS), that too, at gross basis like in the earlier assessment years. Though, the assessee objected to the proposed action of the Assessing Officer, however, the Assessing Officer was not convinced. Observing that the factual matrix and the business model of the assessee for the impugned assessment year is identical to assessment years 2009-10, 2010-11 and 2011-12, the Assessing Officer proceeded to tax all the receipts of the assessee on gross basis, as according to him, they are effectively connected to the Permanent Establishment (PE) in India. Accordingly, he completed the assessment by determining the total income at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. I have carefully considered the submissions made by the assessee and other material placed on record. The assessee has executed various projects in India either directly from head office or through a branch office in India which has been opened with permission from RBI. The assessee has returned income from these contracts as FTS which are taxable either on gross basis u/s. 44D or on net basis u/s. 44DA depending upon date of entering into contract. Both these sections viz. 44D and 44DA applies only if FTS is effectively connected with PE in India. The AO has not disputed the existence of PE in India. The AO has accepted that FTS from those contracts which are signed before 01-04-2003 are effectively connected with PE in India and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancy services has been done by Indian subsidiary DHV BV India Pvt. Ltd. In view of these facts, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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