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TMI Blog2023 (1) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT (Appeals), the evidences placed on record by the assessee, we do not see any infirmity in the order passed by the ld. CIT (Appeal) in holding that the assessee has rightly offered the OCI as fees for technical services under the provisions of section 115A of the Act and the addition made under section 44DA of the Act is liable to be deleted. Ground raised by the Revenue is rejected. - I.T.A. No. 2734/Del/2017 - - - Dated:- 3-1-2023 - Sh. N. K. Billaiya, Accountant Member And Sh. Yogesh Kumar U.S., Judicial Member For the Appellant : Sh. Vishal Kalra Sh. S. S. Tomar, Advs For the Respondent : Sh. Sanjay Kumar, Sr. DR ORDER PER YOGESH KUMAR U.S., JM This appeal is filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) -43, Minto Road, New Delhi [hereinafter referred to CIT (Appeals) dated 06/02/2017 for assessment year 2011-12. 2. The grounds of appeal are as under:- 1. Whether, on the facts and in the circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Rs.3,38,96,437/- (50% of Rs.6,77,92,874/-) made under section-44DA of the Income Tax Act, 1961, thereby dismissing the AO s stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable to tax at 40% on net income basis in following manners:- In the case of the assessee, since the entire contracts are effectively connected to the PE/Business Connection, any services rendered under these contracts even though rendered from outside India are effectively connected to such PE/Business Connection. In the present case, since AECOM Asia Company Limited is receiving FTS from India for carrying out services in relation to agreements for which PO has been established, it can be said that such FTS are effectively connected to PE/business connection in India and therefore, should be taxed as per section 44DA of the Act. It is also important to note that in the present case, such PE/business connection (i.e. P.O.) was already in existence prior to current assessment year and therefore, it has an active role in earning such FTS. 8. The income of Rs. 67792874/- (disclosed as FTS in the return from Chennai Metro Rail Project and Kolkata Metro Rail Project) is now assessed as income from business and profession. This is the income that has been offered to tax as FS @10% u/sll5A in the return of income. Since the assessee has itself disclosed the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced any contrary judicial pronouncements. 9. We have heard the parties perused the material available on record and gave our thoughtful consideration. The Coordinate Bench of the Tribunal while dealing with the similar issues for the Assessment Year 2010-11 in Assessee s own case held as under:- 15. Heard rival submissions perused orders of the authorities below. The issue in appeal has been dealt with by the ld. CIT (Appeals) considering the evidences and submissions of the assessee and following the judgements of the Tribunal of the coordinate bench it has been held that the services rendered by the overseas employees of home office of the assessee from Hong Kong for the activities performed for the project CMRL/KMRL are not effectively connected to PO/PE in India and, therefore, addition made under section 44DA of the Act is liable to be deleted observing as under:- 6.1 I have carefully considered the facts of the case in the light of submissions filed by the appellant. The assessing officer observed that there is a little reference to the offshore services in the contract with CMRL and KMRL and therefore, questioned the delivery of services remotely from overseas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44DA in this context.' As per section 44DA, where a foreign company carries on business in India through a PE in India; and the right, property or contract in respect of which the royalties or FTS are paid, is effectively connected, with such PE or fixed place of profession, then the income will be computed as income from business or profession as per the Act. The assessing officer has justified the addition based on relation of services to the project office whereas the provisions require the contract/right/property to be effectively connected as against mere related . 6.6 The words effectively connected is not defined under the Act. The assessee has relied on the ITAT judgement in the case of JC- Bamford Excavators Ltd. (supra) to clarify the meaning of effectively connected . Relevant extracts are as under: The phrase 'effectively connected with' has neither been defined under the Act nor the DTAA. In such a situation, it becomes crucial to understand the import of such an expression. In our considered opinion, the words 'effectively connected' are akin to 'really connected'. In the context of royalties, it is in the nature of some ..... X X X X Extracts X X X X X X X X Extracts X X X X
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