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TMI Blog2023 (4) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... the year for play out facilities. If for the earlier years, such facilities were not remunerated to the ZEEl, that does not make the service provider a fixed place permanent establishment of the assessee for this year, especially when, for this year, there is an agreement and remuneration for using such facilities are paid. For this year, facts clearly show that ZEEL is a service provider to the assessee. Non-payment, subsistence of any agreement for this facility in earlier years, is also not the case of the LD AO or the learned Dispute Resolution Panel. Further with respect to the claim of the learned departmental representative that if this play out facilities are not used by the assessee then from where the play out is being carried out. For this purpose the assessee has placed a lease agreement between the assessee and Gulf DTH FZ LLC which clearly says that there are two studio accommodation already available with the assessee of 3603 ft on the ground and Mezzanine Floor on rent in UAE for which the rent agreement is placed on record. Therefore, it is not the cases that play out facility is not available with the assessee other than at Noida. Further, it cannot be said that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with share sale agreements of Taj TV India Pvt Ltd etc do have any impact on determination of Fixed Place permanent Establishment. Permanent establishment in respect of advertisement and distribution revenue - DRP confirmed so only because of the reason that the revenue has been continuously holding that the applicant has a permanent establishment in India - With respect to the advertisement agreement, though the subsequent amendments, gives an authority to enter into an agreement to an Indian entity on behalf of the assessee but those have not been habitually exercised by that entity. Therefore, the assessee does not have dependent agency permanent establishment in India. The Burden of proving that assessee has a Permanent Establishment in India and must suffer taxation from business generated from such PE is initially on the revenue as held by Assistant Director of Income tax V E Funds It Solutions Inc. [ 2017 (10) TMI 1011 - SUPREME COURT ] Now it cannot be grievance of the revenue that any information is withheld by the assessee. Thus, we hold that, assessee does not have either fixed place permanent establishment or dependent agent permanent establishment in India. Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee even if has a permanent establishment in India but is remunerated at arm s-length, further tax liability in India would extinguish - As we hold that, though there is no such provision as it exists in India US DTAA, in Indo Mauritius DTAA, even for attributing further profit to the income of the assessee, the revenue is required to bring on record further functions performed, risks assumed and assets used along with capital infused. Before us, revenue could not bring on record any such fact. Therefore, we hold that no further tax liability arises in the hands of the assessee in India. TDS u/s 195 - disallowance of programming cost, transponder fees and up linking charges for non-deduction of tax at source - disallowance under section 40 (a) (i) - AO has disallowed these expenses holding that the payments made for acquisition of rights in respect of various content acquired by the assessee including live feed for broadcasting in India is in the nature of Royalty requiring tax deduction at source - HELD THAT:- DRP while disposing of the objection number 5 has held that the coordinate bench has decided the issue in favour of the assessee in earlier years and the order of the coor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion revenue and issue of the same with respect to advertisement revenue is kept open. ii. However, the payment to its associated enterprises is at arm's-length, nothing further should be attributable to the assessee that can be taxed in India. iii. There is no change in the facts and circumstances of the case compared to assessment year 2011 - 12 that is subsequently followed for assessment year 2006 - 07 to assessment year 2010 - 11 and 2012 - 13. iv. Even otherwise, it was claimed that assessee does not have a fixed place of business in India not having any branch or office in India. The management and control of assessee is situated outside India and is managed by independent directors. v. Assessee is also a tax resident of Mauritius. Further, the agent of the assessee Taj India does not have any authority to conclude contracts in the name of the assessee. vi. It further relied on several judicial precedents to submit that none of the functions and activities is performed in India except collection of advertisement revenue from Indian advertisers and distribution revenue. Findings of Assessing Officer 05. Ld. AO on the submission of the assessee held that i. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prior written permission of Taj India, the whole or any part of its rights to any party in its absolute discretion. g. It can be seen that a major part of the risk in terms of market risk and technology risk are borne by the Taj India. Further measure of the revenue is from advertisement and subscription of the assessee comes through the Indian viewership which is undoubtedly linked with the permanent establishment i.e., Taj India. ii. The learned AO also rejected the argument of the assessee that if remuneration is paid to the dependent agent in source country India at arm‟s-length price, no further profits can be attributed to the source country. AO was of the view that it is conceptually wrong. iii. She referred to the reports on the „Attribution of Profits to Permanent Establishment‟; she held that single taxpayer approach has many conceptual problems. After discussing the above report, she held that a consensus has been arrived at internationally that if remuneration is paid to dependent agent, even in those cases, further profits can be attributed to the source state. Thereafter, she referred to the methodology of computation of the profit attribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to her it is the later [Taj India] that is responsible for all the negotiations in India and its activities in India are devoted exclusively on behalf of the assessee company. vi. Therefore, Taj India has authority to conclude contracts in the name of the assessee and the authority is exercised in India habitually and repeatedly. Hence the assessee has a Permanent Establishment in India within the meaning of article 5(4) (i) of The Double Taxation Avoidance Agreement. vii. On distribution income, She further referred to the distribution agreement between the assessee and Taj India and held that it is clear that Taj India has exclusive right to represent the assessee before the distribution systems/cable operators and negotiate and procure cable distribution license agreement for the service, the term of which shall be determined by Taj India as authorized by the assessee. The distribution revenue collected by Taj India shall be shared in the ratio of 86 x 14 by the assessee and Taj India respectively. viii. Therefore with regard to Taj India acting as a dependent agent for Advertisement Revenue and on account of similar legal position on that issue with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings for each year are separate and a principle of rest judicata does not apply. Accordingly, all these payments are disallowable under section 40 (a) (i) of the act. xi. Accordingly, She held that the total profit of the business is US$ 4,839,582 out of which disallowance of expenditure under section 40 (a) (i) of the act is required to be made with respect to the programming cost of US$ 10,814,810, transponder fees of US$ 1,793,183, up linking charges of US$ 1,790,261 totaling to US$ 143,98,254. Therefore, the business income is US$ 19,237,836. Business income attributable to India was assumed at 81.8% at the exchange rate of ₹ 64.8386 per US dollar was determined at Rs. 102,03,35,860/- . xii. There is also an issue of chargeability of capital gain on sale of Global Sports Business by Assessee to Sony Pictures Network [India] Private Limited [SONY] in this case. During the year under consideration the assessee has sold sports broadcasting business and all assets, right, title and interest of the assessee in the sports broadcasting business to Aqua holding investment private limited, Mauritius ongoing concern basis by way of a slump sale for consideration of US$ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TV Limited Mauritius, a step down subsidiary of the company and sale of entire equity stake in the Indian subsidiary handling sports business viz. Taj Television (India) Private Limited [ Taj India] to Sony group at an aggregated all-cash consideration of US$ 385 million. ZEE in its annual reports of 2018 further noted that second phase of sale of sports broadcasting business was concluded upon receipt of aggregate consideration of US$ 366.32 million after certain adjustment as per the terms of agreement. On 31 August 2016, Zee made announcement at stock exchange disclosing material events of sale of sports broadcasting business. Further, on 20 February 2017, Zee filed to the Bombay stock exchange and National stock exchange of further update on sale of sports broadcasting business. The AO further referred information available in public domain that showed that purchaser has applied to The Competition Commission of India [CCI] to receive approval for the said transfer/transaction. The Competition Commission Of India as per order dated 13/1/2017 passed under section 31 (1) of The Competition Act 2002 on the basis of notice given by SONY PICTURES NETWORK PRIVATE LIMITED and Holdings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent assets, and all other assets, tangible or intangible of whatsoever nature and where so ever situated, each of which relates to all is used in sports broadcasting business. Assessee does not have any immovable property exclusively for conduct of its sports broadcasting business. Therefore, assessee has transferred all the rights and title is an interest in the sports broadcasting business including but not limited to agreements with various sports bodies to broadcast matches, trademarks being Ten sports logo, name etc and other intellectual properties defined under the business purchase agreement. On the basis of the definition of the trademark, the learned AO noted that out of 272 such trademarks of that business , 158 trademarks are with respect to Indian territory [ Schedule 3 of the BPA ] . This shows that the said agreement had indeed transferred a significant right of the assessee in relation to India. The AO further look at clause of the BPA on purchase consideration and noted that committed distribution revenue defined as a special penal clause for adjustment in the purchase consideration for any shortfall in distribution revenue with respect to Indian Territory. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also been established that the said business has territorial nexus with India and that the said transfer is covered by the provision of The Income Tax Act, she invoking the provisions of section 9 (1) read with section 5, held that that any income accruing or arising in India ,directly or indirectly or from business connection in India shall be taxable in India. e) With respect to the eligibility of assessee for the benefit of Double Taxation Avoidance Agreement, it was noted that assessee is a company Incorporated under the laws of Mauritius and it runs and operates its business from Mauritius. The assessee has claimed that it is a tax resident in Mauritius and satisfies the condition under section 90 (4) of The Income Tax Act for being eligible to claim the benefit of tax treaty between India and Mauritius. Further, the claim of the assessee is that the issue is squarely covered under the provisions of article 13(4) of the DTAA. The AO was of the view that assessee was in substance not running the broadcasting business on its own account from Mauritius as decision to sale said business was not taken independently. For this proposition she referred to the resolution of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Buying rate of US dollar as on 31/8/2016 and capital gain chargeable to tax in India was worked out that ₹ 22,137,594,895/-. xxii. Thus, Draft Order u/s 144C of the Act was passed on 27/12/2019 where the ld. AO computed the income of the assessee as under :- Sr No Particulars INR 1 Business income from Broadcasting of channels from India holding that assessee has a DAPE 102,03,35,860/- 2 Capital gain on slump sale of Global Broadcasting business of Assessee chargeable to tax in India as per the Income tax Act as well as per DTAA and benefit of DTAA is not available to the assessee 2213,75,94,895/- 3 Income from Other sources being Interest on Income tax Refund 18,55,93,487/- Total income 2234,35,24,242/- Proceedings before DRP 06. Assessee preferred objection before The Dispute Resolution Panel - 2, Mumbai (The Learned DRP). The directions were issued on 22/3/2021. i. As per objection number 1 and 2, assessee challenged chargeability of capital gain on account of sale of global broadcasting business of the assessee. Objection number 3 and 4 are with respect to the taxability of advertising and distribution revenue holding that assessee has a permanent estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gth in respect of various services provided in India and therefore no further attribution can be made, the action of the learned assessing officer was upheld holding that without benchmarking of all functions of the permanent establishment for generating advertisement revenue it cannot be presumed that the payment made to the agent was at arm‟s-length. It held that even before the DRP applicant did not contradict the findings of the AO with the help of the necessary evidence. So, objection number 4 was also rejected. v. With respect to the objection number 5 about disallowing the programming cost by holding that the same is royalty chargeable to tax and under section 195 of the act the tax was required to be deducted, which is not been made and therefore is disallowable under section 40 (A) (I) of the act and objection number 6 with respect to disallowance of transponder fees and up linking charges, the learned DRP held that as the decision of the coordinate bench, decided in favour of the assessee, has not been accepted by the revenue, and as appeal has been filed before the Honourable High Court, to keep the issue alive, it did not issue any direction to the AO. 07. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection in India nor fixed place or agency permanent establishment in India and, therefore, the said revenues are neither chargeable to tax under the provisions of the Act or under the Treaty; 3. The DRP/AO failed to appreciate that even assuming without admitting that the Appellant has a permanent establishment in India, arm's length consideration paid to the advertising agent, distributor and other service providers in India would extinguish any further tax liability arising in the hands of the Appellant in India; 4. The DRP erred in upholding the action of the AO in treating Programming Cost of US$ 10,814,810 for acquiring telecasting rights as "royalty" and, consequently, disallowing the same under section 40(a)(1) of the Act on account of non-deduction of tax under Section 195 of the Act for reasons which are wrong, contrary to facts and position in law. 5. The DRP erred in upholding the action of the AO in treating Transponder Fees of US$ 1,793,183 and Up linking Charges of US$ 1,790,261 as "royalty" and consequently disallowing the same under section 40(a)(i) of the Act on account of non-deduction of tax under Section 195 of the Act for reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it cannot be said that situs of the business is in multiple countries. iv. The assessee further claimed that assessee is a company Incorporated in Mauritius and is engaged in satellite television broadcasting business. The business process of the assessee‟s operations that are broadcasting, selling, up linking, management, finance and books of accounts are all undertaken outside India. The assessee does not have any branch, respective bank account, books of account or control existing in India or any fixed place of business in India. It was also submitted by the assessee that all principal activities carried out in connection with the global sports broadcasting undertaking are performed outside India. v. Assessee submitted that it only received certain services from Taj India in respect of advertisement and distribution and from ZEE entertainment Enterprises Ltd for play out services. All these entities are mere service providers and paid according to the contracts . However, the assessee has not conducted any activity in India and all its operations are carried outside India. vi. Both these entity i.e.Taj India and ZEE Enterprises Ltd have been paid at arm‟s-le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 23/10/2019 and same are not disputed. xiii. With respect to the observation of the AO that most of the registered trademarks are registered in India, assessee submitted that because some of the trademarks registered in India, it would not mean that undertaking is situated in India. Specific reference was made to the decision of the Honourable Delhi High Court in case of CUB Pty Ltd ( Supra). xiv. Therefore, since the operation of the undertaking are carried out outside India, gain on global sports broadcasting business is a transfer of capital asset situated outside India and hence, there cannot be said to be any income accrued or arising in India and accordingly cannot be taxed in India. xv. Assessee, assuming while denying, submitted that the other limbs of section 9 are not applicable as even otherwise there is no business connection in India. It was the claim that once it is held that the capital asset cannot be taxed under the said limb , since it is not situated in India, it is not permissible to consider Other limbs of section 9 (1) (i) seeking to tax income from transfer of capital asset on the basis of the alleged business connection in India. xvi. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions independently, it was submitted that all the decisions of the assessee have been taken independently in meeting. Mr. Anil is a non-resident and a director of ATL media Ltd, was authorized to enter into the necessary agreements for executing the sale of the global sports broadcasting undertaking. The involvement of ATL Ltd and ZEE is merely in terms of being a shareholder. The disclosure to the various stock exchanges is mandated because the holding company is a listed entity and any material transaction of its subsidiaries required to be disclosed to the stock exchange as per Stock Exchange Listing Agreements, which are mandatory compliances as per SEBI Act. It was the claim of the assessee that business of this assessee has been run for more than 15 years and it has never been the allegation of the revenue that the business is run by someone else other than the assessee company. Therefore, it is now not open to the revenue to contend to the contrary only with the ulterior motive of trying to bring the capital gain to tax in India. It was submitted that even otherwise if the sale of undertaking was on the basis of the decision of zee Ltd, does not make any difference as far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dependently, its distribution rights and the entire agreement was on „principal to principal‟ basis and therefore it does not constitute a permanent establishment of the assessee with respect to subscription agreement/ revenue. xxiii. With respect to the advertisement agreement, it was submitted that Taj India would constitute a permanent establishment only if (1) it has the authority to conclude contract binding the appellant and (2) it habitually exercises such authority. Assessee submitted that Taj India, in line with the Ministry of information and broadcasting guidelines has been given the authority to conclude contract, which has not at all been exercised and no contracts are concluded by it but all by the assessee. There is no evidence available with the revenue that Taj India has „habitually exercised‟ any authority to conclude any contract binding on the appellant. Therefore, it cannot constitute a permanent establishment in terms of article 5 (4) of the DTAA. xxiv. Assessee submitted that as per letter dated 23/10/2009 it submitted copies of various advertisement invoices, which clearly demonstrates that the same have been concluded by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue‟s claim was with respect to the applicability of article 13 (2) is with respect to Taj India as a permanent establishment of the assessee in India and not with reference to the Zee entertainment Ltd., xxx. The assessee submitted that even if the allegation of the revenue of Taj India constituting a dependent agent permanent establishment is presumed to be correct, still the provisions of article 13 (2) cannot be invoked as that article is applicable only in case of fixed place of permanent establishment and does not apply to dependent agent permanent establishment. The assessee led an example that if a foreign bank having various branches in India, the provisions of article 13 (2) of the treaty are attracted either on sale of branch in India or transfer of assets of the branch in India which are economically owned by the foreign bank. Therefore the provisions of article 13 (2) apply on transfer of fixed permanent establishment or assets forming part of fixed permanent establishment and cannot be workable in case of agency permanent establishment. xxxi. The assessee submitted that assuming while denying that assessee has a permanent establishment in India, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012. With respect to the ground number 2 regarding taxing advertisement and subscription income to the extent of Rs. 1,020,334,861/- the learned authorized representative submitted that assessee does not have a permanent establishment in India. The said issue is recurring issue and has been decided in favour of the assessee in the earlier years. The learned authorized representative submitted the various decisions in the assessee‟s own case by the coordinate bench wherein it has been held that advertisement and subscription income does not satisfy the test of business connection and therefore cannot be charged to tax in India. Further, with respect to the Double Taxation Avoidance Agreement the profits of the assessee company shall be taxable in India only if such profits are attributable to a permanent establishment in India. As the assessee does not have any permanent establishment in India, it is not chargeable to tax. 013. Even otherwise, if it is assumed that the assessee has a permanent establishment in India, the alleged permanent establishment is remunerated at arm‟s-length price and therefore it extinguishes any further tax liability in India. 014. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was Incorporated in the British Virgin Islands on 21/6/2000 and thereafter assessee got itself registered by continuation in Mauritius and obtained a Global Business License - 1 in terms of The Financial Services Commission Act 2007. The learned counsel further submitted that as assessee is a registered Mauritian company and at the time of its registration in Mauritius, it was governed by The Financial Services Development Act 2001, which was later changed to Financial Services Commission Act 2007. However prior to financial services development act which came into being in 2001, companies such as the assessee were governed by Mauritius Offshore Business Activities Act 1992. It was submitted That Global Business License - 1 company shall enjoy the benefit of non-taxation in Mauritius only if they are registered in Mauritius but carry out business with a person/entity outside Mauritius. He referred to the relevant provisions of Mauritius Offshore Business Activities Act 1992. Accordingly it was the claim of the learned special counsel that appellant assessee was barred from carrying on any business operation in Mauritius. ii. As the assessee is carrying on sports broadcasting b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the right and authority to creating writing or otherwise an obligation of any kind, express or implied in the name of an on behalf of the assessee relating to activities undertaken in India. It was further stated that clause 5 (b) of the advertisement agency agreement provided that Taj India agrees to submit all proposed agreements and contracts in respect of services and periodic budget of all costs and expenses to be incurred in connection with the services to the assessee for the assessee's approval which shall be granted or rejected by the assessee. This clause was also deleted by the addendum dated 23/1/2008. Accordingly, the effect of this is Taj India now has all the authority to conclude contracts as mandatorily required under the policy guidelines of the Telecom regulatory authority of India. Now it does not have to submit the agreements for the approval of the assessee. Thus the advertisement agreement as amended, had all authority to bind the assessee and that whatever was being done by it, was for and on behalf of the assessee. The guidelines of the Telecom regulatory authority would also apply with equal force with respect to subscription revenue as well. It was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishment itself, then in such case the gain arising therefrom are liable to be taxed in India. It was submitted that assessee during the course of hearing submitted that the permanent establishment in the context of article 13 (2) means only fixed place permanent establishment. This argument may be true to a certain extent, but it cannot be suggested that if an entity is operating through an agency permanent establishment and that business is validated on "as is where is basis" as a slump sale together with the transfer of agent itself with all his belongings, rights, titles, and interest, yet article 13 (2) would not apply. It is the case of the assessing officer that there is a fixed place permanent establishment as well as Dependent Agent permanent establishment. viii. The learned special counsel took us to the factual matrix of the case and the revenue streams of the assessee. He also explained the various steps involved in the business of the assessee. He also took us to the terms of the Business Purchase Agreement dated 31/8/2016. Based on the various terms of that agreement, he submitted that the transaction has a real and close territorial nexus with India. He made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 12.1 of schedule 6 read with schedule 9 saying that it implies that the robust IT system is in place in Noida, which is being transferred under the business purchase agreement. Therefore, according to him the assessee operates from India. xiv. He submitted that the overall implication of the sale of broadcasting business in India has to be seen in light of what is stated in the clause 2, schedule 2 of the business purchase agreement where the transfer of equity shares of Taj India to Sony is contemporaneous and meant to happen concurrently with the transfer of sports business of the assessee. Further as per clause 2.3 in case the transfer of equity shares of Taj India to Sony is not consummated contemporaneously on the closing date, none of the transaction set out in the business purchase agreement shall be deemed to have been concluded and closed. Therefore, according to him, if a step of the entire arrangement fails, the entire transactions are nullified. xv. He further submitted that Taj India functions as a distribution and advertisement-selling agent in India for television channels broadcasted by the assessee. Therefore, it is clear that what is being bought is the spor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so than how assessee claimed depreciation on account of the India operation and further it is nowhere stated as to where the employees are located, if not in India. xxi. He further referred to the claim of the assessee that the play out facility belong to ZEE entertainment Ltd and it was outsourced to that company for a consideration and therefore ZEE entertainment Ltd could not be regarded as a permanent establishment of the assessee. He further referred to the argument of the assessee that facility of ZEE entertainment Ltd was not transferred and therefore article 13 (2) of the Double Taxation Avoidance Agreement was not applicable to the facts of the case. To counter this, he referred to the play out facility agreement and referred to the salient features of that agreement dated 19/4/2017, which has been entered more than eight months after the acquisition of the sports broadcasting business by Sony. He referred to the date of the business purchase agreement as 31/8/2016 and submitted that the play out agreement is dated 19/4/2017. He further referred to clause 8 of the agreement stating that it shall come into effect retrospectively from April 2016 and would be valid only un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to use the premises and this clearly shows that there is a fixed place which is being used by the assessee. It clearly shows that wherefrom the assessee is operating. Accordingly, he submitted that the business operations are being carried on from this premises, which belongs to the affiliates but is made available to the appellant for its business operation. No payments are made for the use of this premise. He further submitted that there is a stipulation in the agreement that the purchaser will use this premises and it shall not be required to make any payment for the use of such devices. Therefore, it indicates that the transfer of the business is together with the facility to use the premises for business operations. Accordingly, he submitted that it becomes apparent that the assessee has a fixed place in Noida from which business operations are being carried on. xxv. He further submitted that it is a settled principle that the premises may not belong to the enterprises, it may not be taken on rent by the enterprises, or may not be otherwise in its possession, but the only requirement is that the premise is at the disposal of the enterprise for its use in the business oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 5 of the India Mauritius Double Taxation Avoidance Agreement stating that it is differently worded and whether or not the payment is made on arm's-length basis, if the activities of the agents are devoted exclusively or almost exclusively on behalf of that enterprises, sale agent would not be considered as an agent of the independent status and would constitute agency permanent establishment for the foreign enterprises. He further submitted that it is not at all in dispute that Taj India is an exclusive agent and is working fully for the appellant. Therefore, in respect of the payment being made on arm's-length basis to Taj India, it cannot be regarded as agent of the independent status under The Double Taxation Avoidance Agreement and itself constitute the agency permanent establishment for the appellant. xxix. Agency permanent establishment cannot be roped in under article 13 (2) because the assets of the agent cannot be transferred as argued by the learned authorized representative, he submitted that in this case the agent Taj India is also being transferred as an integral part of the sports broadcasting business. He referred to the clause 2 read with clause 5 of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r referred to the several decisions of the coordinate bench which is rendered in case of the assessee holding that assessee does not have a permanent establishment in India, he submitted that the facts as brought out on record for this assessment year are totally different from those in earlier years and therefore the decisions rendered by the coordinate bench would not be applicable for the year under consideration. xxxiii. He further submitted that the principle of res Judicata does not apply in tax proceedings and therefore each year has to be judged on the basis of the facts existing in that assessment year. xxxiv. Even otherwise, he submitted that the appellant has misrepresented the facts in earlier years and therefore those decisions having been obtained on account of misrepresentation and concealment of vital facts do not have any binding character. He submitted that the following facts were neither disclosed to the assessing officer nor to the coordinate bench in earlier years: - a) There was a fixed place of business of the assessee in India, at its disposal, as referred to in clause number 9 of schedule 6 of the business purchase agreement dated 31/8/2016 was never ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the income. He therefore submitted that the orders of the coordinate bench, which has referred only the income streams of the agent to determine the status of the permanent establishment, is not correct. h) The issue of the capital gain is arising for the first time in this year and therefore the fresh examination of the facts needs to be done for this year. For the earlier years, facts are only related to the income streams. Here the assets need to be examined and that too capital asset. i) The difference between the DTAA of India and USA and India with Mauritius was never pointed out to the bench by either side. xxxv. Coming to the provisions of the Income Tax Act, he submitted that the gains derived by the appellant are chargeable under the domestic tax laws. He submitted that according to section 9 (1) (i) of the act, income-accruing arising through the transfer of a capital asset situated in India shall be deemed to or accrue or arise in India. He further referred to the provisions of section 5 (2) of the act which makes it clear that the subject to other provisions of the act, the non-resident is liable to be taxed on his India source income. In the present case sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g some properties in Dubai and rent agreement was filed in support of this contention cannot help the case of the assessee. Assessee need to show that wherefrom the business operations are being carried on. Therefore, in absence of any material to even remotely suggest that broadcasting of the channel is being done from Dubai or any other place except Noida is established. He therefore submitted that as the business is certainly a capital asset within the meaning of section 2 (14) of the act which is located in India and therefore the provisions of section 9 (1) (i) get attracted and thus gains arising from the transfer of a capital asset situated in India constitutes income which is deemed to accrue or arise in India and is chargeable to tax. xlii. He even otherwise submitted that the underlying concept in International tax is the notion of separate entity approach, which forms the foundation of taxation of cross-border transaction. The fact that an entity works independent of aspirants and takes its own decisions form the basis on which subsidiaries are recognized in other tax jurisdiction. He submitted that the corporate veil is the very basis of its independent existence in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held on the same date on which the business purchase agreement was signed and therefore it establishes that the decision to sale the broadcasting business was communicated to assessee by its parent only. He further referred to the income tax return filed by the assessee showing the names of the directors of the assessee company. He submits that though assessee has 4 directors, however the agreement of business purchase was signed by some other person on behalf of both the assessee as well as ATL. He submits that the agreement was signed by one Mr. Anil Maurya whose role in the assessee was not at all explained, except for the fact that he was a director in assessee's parent company ATL. From the resolutions submitted by the assessee, it is apparent that he was acting as a representative of the assessee company but it did not specify as to what role and capacity and to what account he represented the assessee. He further submitted that even the decision to authorize that person for the assessee was not taken by the assessee but was in fact dictated by its parents, which is evident from the authority given to him. He further submitted that as per the information available in pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment/transaction has been so arranged to acquire a legal form that allows it to evade taxes on the said income. xliv. Accordingly he concluded his submission on ground number 1 stating that that capital gain arising on the slump sale of global business sports of the assessee is chargeable to tax in India as per the Income Tax Act as well as per DTAA despite the fact that agent of the assessee is paid remuneration at arm's-length. xlv. With respect to ground number 2 and 3, the learned special counsel submitted that the issue relates to the chargeability of the income of the year from business operation in India. He submitted that as submitted earlier the assessee has a permanent establishment in India and therefore its income from such permanent establishment is chargeable to tax in India. The reliance by the learned authorized representative on the decision of the coordinate bench in earlier years would not be applicable, as those decisions have been obtained by misrepresentation of facts. Accordingly, he urged that the addition made by the learned assessing officer deserves to be upheld. xlvi. With respect to ground number 4 and 5 he relied on the findings of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Noida. It was also the claim of the learned departmental representative that an offshore company like assessee, cannot hold any immovable property in Mauritius and therefore the assessee has an immovable property in India. 021. In rebuttal of the same learned authorized representative submitted that i. assessee is engaged in the business of satellite television broadcasting of sports events taking place outside India. The production facility lies at the place of the event i.e., outside India. The assets related to the same are also located outside India. ii. He referred to the submissions before the learned assessing officer stating that it was repeatedly submitted before the learned assessing officer that the production takes place outside India and therefore the assets are located outside India. iii. The learned authorized representative referred to the letter dated 14/3/2019, 23/10/2019, 23/10/2019 and 18/11/2019 to say that production facilities are at the place of the event, which is outside India, and therefore assets related to the same are not located in India. It was submitted that these letters have not been disputed by the AO, learned dispute resolution panel, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FSHORE BUSINESS ACT (MOBA), learned authorized representative submitted that the appellant is registered under The Financial Services Development Act, 2001 and the provisions of Mauritius Offshore Business Act do not apply to it. It was further stated that MOBA applies to activities approved in section 34 of the act and not the activities of the assessee. It was even otherwise submitted that that act was repealed by the Financial Services Development Act, 2001 as per the provisions of section 48 of that act. The learned authorized representative referred to page number 30 of the paper book filed by the revenue. Then it was submitted that assessee is now governed by the Financial Services Act, 2007 that does not have any restriction of holding any property in Mauritius. Therefore the reliance placed by the learned departmental representative on that provision and thus holding that assessee was not capable of doing any business or holding any property in Mauritius is devoid of any merit. xi. In the end, it was submitted that the learned departmental representative by casting suspicion and merely on surmises and conjunctures has alleged that the production facility and assets are si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts was with respect to the advertisement revenue and hence Taj India does not constitute a permanent establishment for advertisement revenue segment as well. xvi. It was further submitted that whether the Taj India constitutes a permanent establishment of the assessee for distribution (subscription income) has been settled by the Honourable Bombay High Court in favour of the assessee and therefore the revenue now cannot agitate that issue. xvii. With respect to the advertisement income assessee submitted that Taj India had been appointed by the assessee as its advertising sales agent to Solicit orders for sale of commercial advertising from clients in India as per agreement dated 4/05/2002 along with several amendments. However, it was submitted that as per article 5 (4) of DTAA , Taj India would constitute a permanent establishment only if (1) Taj India has the authority to conclude contract binding the assessee and (2) Taj India habitually exercises such authority. It was stated that in the present case, while Taj India in line with the guidelines issued by the Ministry of information and broadcasting has been given the authority to conclude contract, however it has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any valuation report. If the assessee has not taken any such report, there is no question of filing of such valuation report. With respect to the submission of the audited financial data of India operation along with the segmental accounts of the company relevant for computation of income was submitted to the learned assessing officer on 3/12/2019 as per submission dated 19/12/2019. He specifically referred to page number 583 of the assessee's paper book, which shows the audited financials of India operations along with segmental accounts of the assessee company, which are relevant for computation of income. It was submitted that the learned AO has accepted it even for computing the capital gains for the transfer of undertaking. It was submitted that the global financial results are therefore not relevant for computing the income arising on transfer of undertaking and may be submitted if still required. The learned assessing officer did not again asked for the global financial statement and therefore before the learned assessing officer same are not filed. The learned authorized representative specifically referred to page number 835 of the paper book of the assessee wherein as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to the banking operation of the assessee. Therefore, it was submitted that the learned assessing officer has proceeded on the factual incorrect basis to make the above allegations. xxiv. With respect to the orders of the coordinate bench in earlier years, the learned authorized this representative submitted that there is no misrepresentation of facts from the side of the assessee. The coordinate benches have passed its order as per the information available on record before the assessing officer. Appeal of the revenue against the order of the coordinate benches has reached the Honourable High Court and therefore the allegation of the learned departmental representative that those orders have been obtained by misrepresentation of facts is clearly incorrect. xxv. Accordingly, the learned authorized representative submitted that the taxing of the capital gain on sale of global sports business is neither chargeable to tax in India under section 9 as well as under the various articles of the Double Taxation Avoidance Agreement in absence of any permanent establishment. Accordingly, the addition made by the learned assessing officer on that account is devoid of any merit. xxvi. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny was entitled to conduct such business or activities as a set out in the application and supplementary document submitted. 024. It has appointed an another entity Taj Television India Private Limited (Taj TV), a closely held Indian company which is engaged in the commissioning and marketing of sports programs events and distribution and dissemination of TV channels, as its advertising sales agent to Solicit orders for sale of commercial advertising time in India under the distributors for licensing Ten sports channel cable systems in India. The main functions of this entity with respect to advertising sales agency is identification of the prospective advertisers, coordinating between assessee and the advertisers, collection and remittance of advertisement revenue on behalf of assessee and providing market information. With respect to the distribution revenue, it promotes function, network function, coordination with assessee and the cable operators, transmission protection and arrangement of the collection and remittance of the subscription revenue. 025. Zee Entertainment Enterprises Ltd,[ ZEEL] is one of the India's leading television, media and entertainment companies. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 31st of March 2017 was drawn wherein in the balance sheet in the current assets only trade and other receivables amounting to US$ 19,593,547, trade and other creditors of US$ 15,797,564. No other assets and liabilities were shown. The share of net profit and loss are allocated to India operation of US$ 4620,563 was shown. With respect to the breakup of the above amount of profit, as per note number 3 details of revenue derived from India operations and cost of sales to the same was shown. Accordingly, in the revenue, assessee disclosed advertisement sports revenue of US$ 5,022,923, distribution income of US$ 38,636,702 and exchange gain of US$ 479,834 totaling to US$ 44,139,460. The cost of sales was derived at net programming cost of 2,88,74,566 US$ , transponder fees of $ 1,793,183, production cost of US$ 2,672,623, up linking charges of $ 1,790,261 and license fee of US$ 53,362. It incurred general and administrative expenditure of US$ 1,201,917 and finance charges of US$ 2,957,837 after observing the depreciation on fixed assets of US$ 175,148. It resulted into US$ 4,620,563 as share of net profit located to India operations. Assessee also submitted form number 3CEB along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n connection with the sports broadcasting business and existing as on the closing date includes all the assets, contracts, permits and licenses, intellectual property, all employees, the records, the insurance policies, claims and rights, all goodwill and other intangibles as well as all information technology systems to the extent those are used solely by the sports broadcasting business and is transferable. The business purchase agreement referred to the channels which are known as Ten 1, Ten 1 HD, Ten 2 , Ten 2 Golf, Ten Cricket (International/Middle East,) and Ten Cricket (Caribbean). It excluded the Ten Sports channel comprised in the Pakistan business . 030. The purchase consideration was agreed at US$ 338,400,000. This clause has the reduction clause of distribution revenue shortfall adjustment, which means the aggregate amount computed on the basis of reduction of US$ 1,920,000 from the purchase consideration for every shortfall of ₹ 10 lakhs in the committed distribution revenue. The committed distribution revenue means an aggregate monthly subscription amount of Rs. 35,50,00,000 net of applicable taxes in the month immediately preceding the month of the closing dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of sports broadcasting business and there are no arrangements with any other person that creates any encumbrance or the right to acquire any other rights in relation to any part of the assets. The properties were also not leased out or licensed to others but the seller has obtained the necessary permission from its affiliates to use the premises from where it is operating. No written agreement has been entered into by parties for such arrangement and no payments are due and shall be required to be made by the purchaser for use of such premises after the closing date. According to clause 19 of the warranties it is mentioned that " Currently plays out of all the channels take place in Noida (India), which the feeds for this channel are sent via fiber to Germany. From Germany (except 10 Cricket (Caribbean) which is distributed via fiber using ECG Canara), the signals of all these channels ( Ten12 HD, Ten Golf HD, Ten Sports Pakistan, Ten Cricket ME, Ten 1 and Ten 2) is uplinked onto the satellite named. IS -20 , which has a footprint over the Indian subcontinent, the Middle East, of Rica, Singapore and Hong Kong, where the linear feet of one or more of the channel is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aj Television ( India) Private Limited as its advertising sales agent. The details of the agreement as well as the subsequent addendum thereto are as under:- i. The assessee has an agreement with Taj television India private limited titled as advertising sales agency agreement dated 4 May 2002. According to that assessee appointed Taj India private limited its non-exclusive advertising sales agent for:- a) soliciting orders for placement of advertisement on the channel and forwarding them to assessee for acceptance b) promote awareness regarding the channel c) reporting to assessee unauthorized duplication and users of the program of which assessee has knowledge d) facilitating arrangements with advertisement agencies, sales representative and advertisers for sale of advertisement line and establishing effective communication with them, e) assistance in creating from time to time rate card both in rupees and US dollars, f) conducting market studies and research in preparing market reports g) submitting to assessee periodic reports on the market and its advice with regard to the market h) collect advertisement revenue on behalf of assessee and remit the same in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Taj television India private limited was entered into. According to that clause 5 (a) of the agreement was replaced with effect from 1 April 2006 as under:- "in providing the services pursuant to this agreement, Taj India shall have the right and authority to assume or create, in writing or otherwise, and obligation of any kind express or implied, in the name of and on behalf of Taj, relating to activities undertaken in India. Subject to exercising due diligence and care and pursuant to the interest of Taj including but not limited to adherence to the rate card as is agreed to between Taj India and Taj, getting any arrangements at brands to the rate card agreed with Taj and ensuring that the advertisement procured meet the requirements as laid down under the advertising code prescribed under the Cable Television Network (Regulation) Act, 1995." iv. A further addendum was made on 28 December 2007 to the advertising sales agency agreement wherein no substantive changes were made to the rights and authorities of the parties. However on 23 January 2008 one more addendum was made according to that clause 5 (B) of the agreement entered into on 4 May 2002 was deleted. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amining the requirement of article 5 of the Double Taxation Avoidance Agreement to constitute agency permanent establishment, the Tribunal actually held that none of the conditions as stipulated in article 5(4) was applicable because Taj India was acting independently qua its distribution rights and the entire agreement was on principal-to-principal basis. Therefore, it was held that the distribution income earned by the assessee cannot be taxed in India because Taj India does not constitute an agency permanent establishment under the terms of article 5(4) of the Double Taxation Avoidance Agreement. The order of the first appellate authority was accordingly upheld." 039. It is further the claim of the assessee about the functions and activities performed by it stating as under:- Serial number Functions//activities performed Outside India In India 1 Acquisition of programming contains/rights Yes No 2 Hiring of transponder facility Yes No 3 Venus of major events held during the year yes no 4 on ground activities like up linking facilities yes no 5 production of program and production crews yes no 6 fixed assets/telecasting facilities like studio et cet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s double taxation avoidance agreement there is no such condition, article 5 (5) provides as under:- "5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted exclusively or almost exclusively on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph." 042. Therefore, it is apparent that there is no such condition that if a dependent agent is paid at arm's-length price, there cannot be any further attribution of profit in the hands of assessee. However, it needs to be established that dependent agent has performed the function on behalf of the non-resident entity and not for the services provided to the non-resident resident enterprises. If, it is shown that the dependant agent permanent establishment has performed functions on behalf of the non-resident entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablishment of the assessee in India. Accordingly, distribution income of the assessee was held not to be taxable in India because Taj India does not constitute an agency PE under article 5 (4) of the Double Taxation Avoidance Agreement. This was held by the coordinate bench in paragraph number 17 of the decision. This decision was challenged by revenue before the Honourable High Court and Honourable High Court in (2020) 425 ITR 141 dated 6/2/2020 has upheld the order of the coordinate bench. Subsequently for assessment year 2006 - 07 to 2008 - 09 on 23 December 2016, coordinate bench in 162 ITD 674 has further held for distribution income that Taj India has been remunerated at arm‟s-length therefore, without deciding whether the assessee has a permanent establishment in India with respect to distribution income as well as advertisement income , coordinate bench decided the issue in favour of the assessee by following the decision of the honourable Bombay High Court holding that when the permanent establishment is remunerated at arm‟s-length, no further profit attribution is required. For assessment year 2009 - 10 and 2010 - 11, in assessee‟s own case in ITA numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record either at the assessment stage or at the ITAT stage that Taj India had a PE which habitually exercised the authority to conclude the contract on behalf of the assessee. Coordinate bench also referred to the decision of special bench in case of Motorola incorporation versus DCIT (2005) 95 ITD 269 holding that the burden is first on the revenue to show that the assessee had a taxable income under the Double Taxation Avoidance Agreement and then the burden is on the assessee to show that its income is exempt under DTAA. It further followed the decision of coordinate bench in case of Right florists private limited (2013) 143 ITD 445. It held that Taj India cannot be held to be dependent agent permanent establishment of the assessee in India under article 5 (4) (i) of India Mauritius DTAA with respect to the distribution revenue. However, with respect to the advertisement revenue it accepted alternative plea of the assessee with respect to advertisement revenue that as Taj India was remunerated at arm‟s-length price, no further profit is required to be attributed with respect to advertisement revenue. It did not decide whether for advertisement revenue there exists a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Zee. Therefore, on this account, we do not agree that there is any misrepresentation of fact or concealment by the assessee at the time of rendering of those decisions. 047. The next challenges with respect to the addendum entered into with respect to the advertisement agreement. We find that at page number 68 of the paper book the original agreement was executed on 4 May 2002, firstly amended on 27 April 2006, then on 28 December 2007, further on 23 January 2008, on March 26, 2008, on 1 April 2013, 1 May 2013, 20 February 2015 and 28 February 2016. If we carefully considered the order of the coordinate bench for assessment year 2012 - 13 rendered on 22/3/2022, in paragraph number 11 the impact of the addendum was submitted before ITAT by the learned departmental representative. It was the specific argument that by these amendments now the agreement gives Taj India the right and authority to assume or create an obligation of any kind in the name of and on behalf of the assessee and therefore in terms of article 5 (4) of Indo Mauritius DTAA, there is a dependent agent permanent establishment. It was the specific argument of the learned departmental representative that Taj India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as of the India operations shows many functions, which could not be performed without the presence of the assessee in India through either itself or personnel or agents. As this information was never disclosed by the assessee, the orders of the coordinate bench should not be followed as they have been obtained by misrepresentation of facts for concealment of the item particulars. We find that transfer pricing study report is for a particular year. Further, it is not the assumption of the learned special counsel that these facts were not disclosed by the assessee in transfer pricing study report for earlier years. Therefore, disclosure of the facts for the current year would be considered in the assessment of current year. Further it is merely an assumption of revenue that functions could not have been performed without agent or other parties, cannot be accepted because, it is for revenue to show who performed these functions. It is also not the allegation of TPO in any of TP Assessment of those parties to show disparity in functions performed. This does not make the orders of the earlier years erroneous or obtained by misrepresentation of facts. 051. For the play out agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2016 - 17, Taj has paid US$ 1,048,289 for play out cost, encoding and up linking incidental functions . As per the agreement, ZEEL provides following services to Taj:- Maintaining agreed technical specification in providing the broadcasting operations and engineering facilities to each of the channel of TTL Provide quality support relating to latest broadcast features viz multiformat play out facility, automation features, we deal storage server capacity -wise, logo bug, scroll and interactive facility. Referring to play out details as per business purchase agreement:- 19. Technical Arrangements 19.1 Currently, play out of all the channels takes place in Noida (India),. Which, the feeds for this channel are sent via fiber to Germany. From Germany (except ten Cricket (Caribbean) which is distributed via fiber using ECG Canada), the signals of all these channels ( Ten 1HD, Ten Golf HD, Ten Sports (Pakistan) , Ten Cricket (ME) , Ten 1 and Ten 2) ESOP linked onto satellite named IS -20 , which has a footprint over the Indian subcontinent, the Middle East, Africa, Singapore and Hong Kong, where the linear feet of one or more of the channel is distributed in each of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctice Relation To Permanent Establishment written by Shri Ashish Kurundia page number 56 and 57 of the book. From the above cases, it can be clearly seen that equipment similar to those used for play out for Channel has been held to be a permanent establishment if the business of the non-resident enterprises carried out through it. Further, in Swiss server case and Sweden data center case, it was held that there is no requirement that the employees of the German/overseas Company should operate the server/data center. It is situation here. There is no requirement that employees of the applicant should run the play out centers. in Swiss server case, affiliate of German company in Switzerland was managing the server. Here affiliate of the applicant in India is providing play out services. The AO further placed reliance on page number 176 of the same book wherein it has been held that the " The enterprise can carry out its business activities through itself or, through its employees or dependent agents. The presence of personnel is not necessary to consider that an enterprise value your partly carries on its business at a location when personnel are in fact required to carry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee are carried out through a fixed place in India, the assessee would be deemed to have a permanent establishment in India. 5.3.5 In view of the above, it is held that the assessee has a fixed place permanent establishment in India during the year under consideration." 052. Based on above findings, the learned AO held that the assessee has a fixed place permanent establishment in India in the form of play out stations. 053. According to Article 5 (1) of DTAA "For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of the enterprise is wholly or partly carried on" 054. Therefore there has to be (i) Fixed Place (ii) of Business (iii) through which (iv) business of the enterprises ( Foreign entity) (v) is (vi) carried on (vii) wholly or partly . 055. The main contention of the assessee is that :- i. Production facility was always based out of India and cannot be mixed up with play out service availed by Taj. ii. There was no corroborative evidence established by the learned assessing officer for shifting for production facilities to India. iii. It is only one of the compon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lion was charged by that company however, no amount was charged for transmission from the assessee in the financial year March 16 under the head transmission income. Thus, there is no play out agreement for earlier years. According to him now, it is not open for the assessee to argue that assessee was getting the services of that company as a service provider. Therefore, according to him if at all ZEEL was rendering play out functions for the channels owned by the assessee, it was in operation done for and on behalf of the assessee and not as a service provider to whom such an operation was outsourced. It was the claim of the learned DR that the play out facility was used all along by the assessee and ZEEL was not a service provider but a group entity acting for and on behalf of the assessee without any consideration and without any agreement or arrangement to show otherwise. This together with the fact that in the business purchase agreement in warranties, properties are mentioned as per clause 9 and technical arrangements as per clause 19.1. According to him, it proved that the seller has obtained the necessary permission from its affiliates to use the premises. It is operating a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year, facts clearly show that ZEEL is a service provider to the assessee. Non-payment, subsistence of any agreement for this facility in earlier years, is also not the case of the LD AO or the learned Dispute Resolution Panel. We may refer to the Model Tax Convention On Income And Capital (OECD) (2017) Wherein paragraph number 8 of the commentary deals with such an issue saying that clearly, whether or not a permanent establishment exists in the state during a given period must be determined on the basis of the circumstances applicable during that year and not those applicable during a past or future., Such as a period preceding the adoption of new arrangements that modified the way in which businesses carried on. Therefore, it may be possible that at any one point in time the facts may suggest one thing and change in the facts may suggest another thing at a different point of time. Further with respect to the claim of the learned departmental representative that if this play out facilities are not used by the assessee then from where the play out is being carried out. For this purpose the assessee has placed a lease agreement between the assessee and Gulf DTH FZ LLC which clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depend in each case on its own facts and not on any general theory of law. Thus, the use of the place of business for the activity of the enterprises is a question of fact and need to be established." [Page numbers 181 - 183 Chapter 7 - connection between place of business Law And Practice Relating To Permanent Establishment Ashish Karundia]. On the facts, assessee has clearly stated that play out activities are minuscule part of operation of the sports broadcasting business of the assessee which is assigned to a group company i.e. ZEEL. For the services of the group company, there is an agreement through which the payments are made. Undoubtedly, manner of entering into that agreement is doubted by the learned special counsel, but the fact of payment and play out activities carried out from that fixed place cannot be denied. Unless, there are specific evidences led by the revenue that it was not the business of the service provider but the business of the assessee itself was carried on from those play out facilities, fixed place permanent establishment of assessee cannot be established. It is generally the obligation of the party who alleges to prove the allegation. The defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed dispute resolution has dealt with at paragraph number 16 wherein the learned DRP confirmed so only because of the reason that the revenue has been continuously holding that the applicant has a permanent establishment in India. However, with respect to the subscription agreement is the honourable Bombay High Court in assessee's own case for assessment year 2004 - 05 and 2005 - 06 has held that Taj India was acting independently, its distribution rights and entire agreement was on principal-to-principal basis and therefore Taj India does not constitute a permanent establishment of the assessee. Therefore, with respect to the subscription agreements, the issue is squarely covered in favour of the assessee by the above decision. With respect to the advertisement agreement, though the subsequent amendments, gives an authority to enter into an agreement to an Indian entity on behalf of the assessee but those have not been habitually exercised by that entity. Therefore, the assessee does not have dependent agency permanent establishment in India. 065. The Burden of proving that assessee has a Permanent Establishment in India and must suffer taxation from business generated from su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisement and subscription revenue are held to be taxable, Treaty provisions are applied. Even otherwise the learned dispute resolution panel has accepted the applicability of the Treaty provisions to the transaction of the sale of undertaking holding that it is covered by article 13 (2) of the Double Taxation Avoidance Agreement. Therefore, we reject the contentions of the AO that assessee should be denied the treaty benefit. 068. Now the issue arises that whether the provisions of article 13 (2) of the treaty is applicable or article 13(4) of the treaty should be applied. 069. Provisions of article 13 (2) provides that:- 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed base, may be taxed in that other State.' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. We do not find any reason to hold that about decisions are obtained by any misrepresentation of fact or withholding any vital facts. Further, there is no change in the facts and circumstances of the case, therefore respectfully following the decisions of the coordinate bench, which is upheld by the honourable High Court, we hold that the advertisement and subscription income is not chargeable to tax in India. 076. With respect to the plea that if the assessee even if has a permanent establishment in India but is remunerated at arm's-length, further tax liability in India would extinguish, we hold that, though there is no such provision as it exists in India US DTAA, in Indo Mauritius DTAA, even for attributing further profit to the income of the assessee, the revenue is required to bring on record further functions performed, risks assumed and assets used along with capital infused. Before us, revenue could not bring on record any such fact. Therefore, we hold that no further tax liability arises in the hands of the assessee in India. 077. Accordingly, ground number 2 and 3 of the appeal are allowed. 078. Ground number 4 is with respect to the disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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