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TMI Blog2023 (11) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... e 5(2) is no more than an illustration or examples of application of permanent establishment under basic rule under Article 5(1). However, so far as the provisions of India - UK tax treaty are concerned, the clauses (j) and (k) of Article 5(2), which are on the lines of provisions in Article 5(3) in all most standard model conventions. Therefore, they rejected the earlier submissions of the assessee that unlike the applicability of basic rule are in consonance with the illustrations contained in Article 5(2)(a) to (i) and even the clauses (j) and (k) has to pass the test of basic rule. We observe that the meaning of furnishing emphasizes the idea of providing necessary or other services. It provides general meaning to emphasize to carry out certain services, which may include provision of services. It is fact on record that legal interpretation or technical interpretation of treaty will leads to nowhere. It is also a fact on record that the assessee provides various services to the clients in the contracting state, i.e., in India. When the other conditions contained in the clause (k) exists like the employees or other personnel are in India for more than 90 days in the twelve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case are, assessee is a partnership firm engaged in the practice of law. During the previous year relevant to assessment year 2005-06, personnel of the assessee visited India for an aggregate period of 144 days, excluding multiple counting and vacation days. The assessee filed a return of income on 29.10.2005 declaring income of ₹.1,10,49,880/-. In the notes to statement of computation of total income, it was stated that: - 5. The firm has not opened any office or branch in India. 6. The firm services several multinational clients not only in the UK but in respect of the client's needs around the world. 7. During the year ended March 31, 2005, the firm has provided professional service to certain clients whose operations extended to India. This was largely serviced by the partners and staff in the UK 8. No office or place of work was established by the firm in India. All expenses of travel and stay at hotels and incidentals were borne by the clients. 9. On the basis of the above facts, it is submitted that no income is chargeable to tax in India as the firm has no permanent establishment in India. 3. Without prejudice, an Income and E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds relating to taxation under article 15 of the DTAA as infructuous. 6. Aggrieved with the above decision, both parties filed appeals before the Tribunal. Initially, when Department's appeal being ITA No. 3039/Mum/2008 came up for hearing, the request made by the assessee for consolidation of both appeals was not accepted by the Tribunal and the Department's appeal was heard and partly allowed vide order dated 27.12.2010. Against the said order, an appeal was filed by the assessee to the Hon'ble High Court at Bombay, wherein it was inter alia pleaded that the Tribunal ought to have heard the cross appeals together especially since the appeal involved connected issues. The Hon'ble Bombay High Court vide order dated 23.11.2022 accepted this plea, set-aside the ITAT's order and directed that both appeals be heard together. The Hon'ble High Court has clarified that all contentions are left open. Accordingly, both appeals were heard together by the bench. 7. First we proceed to dispose of the appeal of the assessee in ITA.No. 3280/MUM/2008. 8. Assessee has raised following grounds in its appeal: - 1. The learned Commissioner (Appeals) erred in ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant for the present purposes, read as under: Article 5: Permanent Establishment 1. For the purposes of this Convention, the term permanent establishment means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term permanent establishment shall include especially: (a) place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) premises used as a sales outlet or for receiving or soliciting orders; (g) a warehouse in relation to a person providing storage facilities for others; (h) a mine, an oil or gas well, quarry or other place of extraction of natural resources; (i) an installation or structure used for the exploration or exploitation of natural resources; (j) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than six months, or where such project or supervisory activity, being incidental to the sale of machinery or equipment, continues for a period not exceeding six months and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies mentioned in sub-paragraphs (d) to (e) of the paragraph, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. Article 5(1) of the DTAA provides an exhaustive definition of the term permanent establishment to mean a fixed place of business through which the business of an enterprise is wholly or partly carried on. Thus, for a PE to exist, the primary requirement is that there should be a fixed place of business through which the business of the enterprise must be carried on. Unless such a fixed place exists, there can be no question of the enterprise having a PE in India. Since the assessee does not have a fixed place of business in India, the requirements of article 5(1) are admittedly not satisfied. Article 5(2) provides an illustrative list of situations wherein a PE can be said to exist. For instance, it refers to place of management, a branch, an office, a factory, a workshop, premises used as a sales outlet or for receiving or soliciting orders, a warehouse, a mine, an oil or gas well, quarry, an installation or structure, a building site or construction, installation or as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82. Learned senior counsel's basic argument is that article 5(2)(k) of the India-UK tax treaty is not to be construed on standalone basis, and it can only be viewed in conjunction with article 5(1). Learned counsel's case is the sub-clauses in article 5(2) are no more than illustrations of the situations in which article 5(1) can apply but such examples are to be seen against the background of general definition given in article 5(1) in such a way that examples listed in article 5(2) are PE only if they meet the requirements of article 5(1) of tax treaty. It was thus argued that in order that the assessee can be said to have a PE in India, the basic conditions of article 5(1) are to be necessarily satisfied, and merely satisfying the requirements of any of the sub-clauses in article 5(2), even if that be so, would not suffice. It was also contended that there was no continuity of activities in India, and the partners and staff members of the assessee firm visited India only on as and when required basis. The activities of the assessee were claimed to be sporadic or isolated. The stand of the assessee thus was that there was no framework or infrastructure, no continuity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation. He thus submits that the Assessing Officer is in error in giving a 'without prejudice' finding to the effect that, even if provisions of article 5(2)(k) are held to be inapplicable, the assessee will still have taxability in India in terms of the provisions of article 15. Learned counsel concludes by submitting that since the provisions of article 5 or article 15 do not apply to the situation before us, and since income of the assessee is not taxable in India under any other provisions of the India-UK tax treaty either, the income of the assessee, in terms of the provisions of India-UK tax treaty, is not taxable in India at all. 84. Learned Commissioner - Departmental Representative, on the other hand, contends that article 5(2)(k) is a deeming fiction and it has to be, therefore, construed on standalone basis in the sense once the conditions laid down in article 5(2)(k) are satisfied, nothing further is needed to hold that permanent establishment exists Learned Commissioner contends that the provisions of article 5(2) and article 5(1) are not be read together, nor does article 5(1) restrict the application of article 5(2)In case, one is to proceed on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments and relying upon the stand taken by the assessee before the authorities below he once again urges us to hold that the assessee did not have any permanent establishment in India, and since the assessee did not have any permanent establishment in India, no part of its business income can be taxed in India 86. We have given our careful consideration to the rival submissions, perused the material on record and duly considered the applicable legal position 87. We consider it appropriate to reproduce below the provision contained in article India- UK tax treaty which is subject-matter of our consideration: . 88. Article 5(1) of the India UK tax treaty refers to the requirements of what is often termed as, basic rule PE This refers to a fixed place of business through which business of the enterprise is wholly or partly carried out. Elaborating upon the scope of this provision, a co- ordinate Bench of this Tribunal, in the case of Airline Rotables Ltd. UK v. Joint Director of Income-tax 40 DTR 226 and after analysis of earlier decisions of this Tribunal in the cases of Western Union Financial Services Inc. v. Asstt. DIT [2007] 104 ITD 34(Delhi) and Motorola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erprise for such purpose, but only if activities of that nature continue (for the same or a connected project) within a Contracting State for a period or periods aggregating more than six months within any twelve-month period. OECD Model Convention Article 5-Permanent Establishment (1) For the purposes of this Convention, the term permanent establishment means a fixed place of business through which the business of an enterprise is wholly or partly carried on. (2) The term permanent establishment includes especially:- (a)a place of management; (b)a branch; (c)an office; (d)a factory: (e)a workshop; and (a mine, an oil or gas well, a quarry or any other place of extraction of natural resources. (3) A building site or construction or installation project constitutes a permanent establishment only if it lasts more than twelve months. US Model Convention Article 5-Permanent Establishment. (1) For the purposes of this Convention, the term permanent establishment means a fixed place of business through which the business of an enterprise is wholly or partly carried on. (2) The term permanent establishment includes e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installation project constitutes a permanent establishment only if it lasts more than twelve months. Any of those items which does not meet this condition does not of itself constitute a permanent establishment, even if there is within it an installation, for instance an office or a workshop within the meaning of paragraph 2, associated with the construction activity. Where, however, such an office or workshop is used for a number of construction projects and the activities performed therein go beyond those mentioned in paragraph, it will be considered a permanent establishment if the conditions of the article are otherwise met even if one of the projects involved lasts for more than 12 months. [Emphasis supplied] 91. It is thus clear that, even as per the OECD Model Convention, one of the items included in article 5(2), i.e., 5(2)(), of India-UK tax treaty is such that it would not constitute permanent establishment under the basic rule of article 5(1), and it is only on account of deeming fiction provided by the provision of article 5(2)(). It can be treated as a permanent establishment. We are in considered agreement with this analysis in OECD Model Convention Commentary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rially similar to the argument raised by the assessee before us and in respect of materially similar treaty provision, also came up for consideration before Hon'ble Authority for Advance Ruling in the case of P. No. 28 of 1999 (supra). Rejecting this plea, Hon'ble Justice Ranganathan, Chairman - AAR, observed as follows:- 23. The learned counsel also submitted that the definition of PE is only what is formulated in article 5(1) and that article 5(2) is only illustrative of the cases that fulfil the requirement of paragraph 1 of article 5. In other words, XYZ cannot be said to have a PE even if the requirements of sub-clause (1) are satisfied, unless it has a fixed place of business in India. He relies on paragraph 11 of the Commentary on OECD Model Convention which reads thus: 11. [General Remarks] This paragraph contains a list, by no means exhaustive, of examples, each of which can be regarded, prima facie, constituting a permanent establishment. As these examples are to be seen against the background of general definition given in paragraph 1, it is assumed that the Contracting States interpret the items listed, a place of management, a branch', 'an of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an independent application of article 5(2) without reference to article 5(1) came to the conclusion that a PE existed under Article 5(2)(k). It is respectfully submitted that this cannot be regarded as the correct view. The reliance by the Tribunal on OECD, UN and US models for the purposes of segregation into two categories is not apposite. The said models specifically carve out service PE and installation PE and provide a different treatment for the same. However, insofar as article 5 of India-UK DTAA is concerned, no such differentiation is made. Notwithstanding this material difference between the OECD, US and UN Models vis- -vis India-UK DTAA, the same were relied upon by the Tribunal for holding that article 5(2) of India-UK DTAA is a mixture of article 5(2) and article 5(3) in model conventions and that the clauses consisting in article 5(2) of India-UK DTAA are, therefore, not homogeneous and these clauses do not belong to the same genus. No such differentiation is warranted between various clauses of article 5(2), which is clearly brought out in the decision of the Hon'ble Supreme Court in the case of Formula One World Championship Ltd. vs. CIT(IT)-3, Delhi [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, it is submitted that article 5(1) and 5(2) have to be read together and, unless the requirements of article 5(1) are met, a permanent establishment cannot be said to exist. Similar view is taken by the Hon'ble Tribunal in R B Falcon Offshore Ltd. vs. Addl CIT [2010] 42 SOT 432 (Del), wherein, while interpreting the scope of article 5(2)(j) of India-USA DTAA, i.e., installation PE, it was held as under: 9. Then, there is a question-whether, the assessee had PE under any provision other than Article 5(2)(j). The case of the ld DR is based solely on the Mumbai address of the assessee mentioned in agreement with Petrom SA. It has been mentioned earlier that the assessee has been described as a contractor , a body corporate established under the laws of USA, having its office at 1101, Phil Tower Building. City of Tulsa, Oklahoma, USA, and also having its India office at 501, Balaram, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. It is submitted that the agreement had been concluded from this office and all business activities in pursuance of the agreement and the other agreement have been managed and controlled from this office. Therefore, this office con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble ITAT has held that illustrations given in para 5(2) have to be seen in the background of the general definition given in article 5(1). Thus, the artificial distinction sought to be made out by the Hon'ble ITAT in assessee's case for AY 1995-96 does not have any legal support and is contrary to the decision of the Hon'ble Supreme Court and the coordinate bench. In view of the subsequent decision of the Hon'ble Supreme Court, the decision of the Hon'ble ITAT in AY 1995-96, or the decisions which follow it, would no longer be good law or a binding precedent. The ITAT in AY 1995-96 has also not taken note of the proviso below article 5(2) of the India- UK DTAA, which reads as under: Provided that for the purposes of this paragraph an enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in connection with, or supplies plant and machinery on hire used or to be used in, the prospecting for, or extraction or production of, mineral oils in that State. Therefore, wherever it was desired that the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Hon'ble Supreme Court in the case of Formula One World Championship Ltd. v. CIT (International Taxation) 3, Delhi [2017] 80 taxmann.com 347 (SC) and submitted that it is held that Article 5(1) and 5(2) are independent in nature. Further, he submitted that Para No. j and k are deeming provisions and he argued that the Article 5(2) is independent and applicable accordingly. Further, he submitted that ITAT has considered the similar issue in assessee s own case and followed various model conventions to reach the decision that Article 5(2) can be applied independently without reference to Article 5(1). Further, he submitted that Hon'ble Supreme Court decisions are in favour of the revenue. 12. With regard to reimbursement, he submitted that it is part of service charges. Therefore, it is also applicable as held in assessee s own case. 13. Considered the rival submissions and material placed on record, we observe from the record that the similar issue was considered by the coordinate bench and decided the issue against the assessee in the Paragraph Nos. 89 - 96 in the AY 1995-96 where they dealt with the issue of existence of permanent establishment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has elaborately discussed this issue in assessee s own case for the A.Y. 1995-96 in the Para Nos. 90 to 102 of the Order passed by them. For the sake of clarity, it is reproduced below: - 90. A plain reading of Article 5(2) of India UK tax treaty, in the light of the above discussions, clearly shows Article 5(2) of India UK tax treaty is a mixture of what is usually contained in Article 5(2) and Article 5(3) in all major model conventions i.e. UN Model Convention, OECD Model Convention an UN Model Convention. The clauses consisting in Article 5(2) of India UK tax treaty are, therefore, not homogenous and these clauses do not belong to the same genus. One cannot therefore proceed on the basis, as has been urged by the learned senior counsel for the assessee, that some degree of uniformity in treatment of all these sub clauses is warranted. What applies to clause (a) to (i) of this Article does not necessarily also apply to article (j) and (k) of this Article 5. As regards the first category of permanent establishments, i.e. under clause (a) to (i), OECD Model Convention Commentary, which is also adopted by the UN Model Convention Commentary, does state that the second paragr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UK tax treaty, makes the position even more clear by observing, inter alia, as follows: Article 5, paragraph 3, subparagraph (b), deals with the furnishing of services, including consultancy services, which are not covered specifically in the OECD Model Convention in connection with the concept of permanent establishment. (Emphasis supplied by us) 93. According to this analysis in the UN Model Convention Commentary, and with which we are in considered agreement, Article 5(3)(b) of UN Model Convention, which is materially similar to the provisions of Article 5(2)(k) of India UK tax treaty, extends to the areas not covered by the OECD Model Convention. Obviously, a permanent establishment under basic rule cannot be said to be not covered by the OECD Model Convention. According to the UN Model Convention Commentary, the scope of this provision extends beyond the scope of permanent establishment under the basic rule. For this reason also, we are unable to accept learned counsel s suggestion that Article 5(2) of India UK tax treaty should only be read as a bunch of illustration of permanent establishments under the basis rule set out in Article 5(1). 94. Learned seni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e items which may or may not fall within the scope of the primary definition. That apart, even assuming, at best, that the inclusion clause is to be interpreted against the background of the general definition contained in paragraph 1 and bear some analogy to it, all that can be said is that sporadic and isolated activities, referred to in clause (1), will not be sufficient to constitute PE and that there should be some degree of continuity or durability and a framework against which the services are rendered. That kind of framework and degree of stability is present here. It must, therefore, be held that XYZ has a PE in India. (Emphasis supplied by us) 96. We are in considered and respectful agreement with the legal proposition so laid down by the Hon ble Authority for Advance Ruling. Interestingly, in this case, even as it was not brought to the notice of the Hon ble Authority of Advance Ruling that the OECD Commentary is in respect of the provisions which are not in pari materia with the respective tax treaty provisions [the provisions of Article 5(2) of OECD Model Convention, in respect of which commentary was written and as we have seen earlier in this order, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de or supply with . It is primarily on this basis that it is contended that expression furnishing refers to providing for or arranging or supplying the services, rather than rendering the services oneself as is done by the professionals like lawyers. 101. We are, however, unable to see legally sustainable merits in this plea. As for the hyper technical suggestion that professional services can only be rendered and not furnished , and the connotations of furnishing of services cannot be extended to rendering of services, we may mention that connotation of rendering also extend to to give or make available; provide (www. thefreedictionary. com/ render) and to furnish; to state; to deliver; as to render an account; to render judgment (http://www. webster‐dictionary.org/definition/render). Similarly, one of the usage of expression furnish also refers to to furnish one with knowledge or principles (www.webster‐dictionary.org /definition/ furnish). The expression rendering and furnishing are somewhat interchangeable in normal course of business, and it will be too pedantic and hyper technical an approach to narrow down the meaning of the expression fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cles (1), (2) and (3) of Article 5 would clearly show that only certain forms of establishment are excluded as mentioned in Article 5(3), which would not be permanent establishments. Otherwise, sub-article (2) uses the word 'include' which means that not only the places specified therein are to be treated as permanent establishments, the list of such permanent establishments is not exhaustive. Further, they held that in order to bring any other establishment which is not specifically mentioned, the requirements laid down in sub-article (1) are to be satisfied. Therefore, they clearly held that the list of inclusion mentioned in sub-article (2) has to be considered as permanent establishment and whatever any other establishment which is not specifically mentioned, the requirements laid down in Sub-article (1) are to be satisfied. In the given case the Coordinate Bench has dealt with the issue of attracting sub-clause(k) in the case of the assessee and are dealt in detail as well as gave a clear finding. The same is discussed in the above paragraphs clearly establishes that assessee is having a PE in India as per Clause (k) of the Article 5(2). Therefore, clause (k) is attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R and also perused the record. Admittedly, the Ld A.R had placed reliance on the decision rendered by the Special bench in the case of Clifford Chance (supra) at the time of hearing. There should not be any dispute that the decision rendered by the Special bench should be preferred over to the decision of the Division bench. Hence, the impugned order of the Tribunal suffers from the mistake apparent from record in not following the decision of Special bench and hence the same requires to be corrected. The issue regarding the quantum of income attributable to Permanent Establishment is discussed in paragraph 12 of the order. In view of the discussions made supra, we order the existing paragraph 12 of the order of the Tribunal dated 8.8.2004 passed in ITA No.1711/Mum/2004 relating to AY 1997-98 shall be deleted and in that place following paragraph shall be inserted. 12. We shall now take up the appeal filed by the revenue. The grounds numbered as 1 4 relate to the assessment or Professional receipts. Though the assessing officer has assessed the entire professional receipts as the income of the assessee, we notice that the Ld CIT(A) has held that, only that portion of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 998-99 to 2001-02 vide order dated 7.9.2015, the Tribunal has held that the profit which is attributable to the PE, can only be assessed in India. Relevant para of the Tribunal s orders is reproduced below: 19. In ground no. 1, the Revenue has challenged the taxability of income related to work performed in India. Assessing Officer has taken a view that even where only part of services was performed in India, entire income was taxable in India. Whereas, the Ld. CIT(A) has held that only income in respect of services rendered in India which are attributable to the PE only that income would be taxable in India. The Tribunal though in AY 1995-96 had decided this issue against the assessee after invoking the principle of force of attraction , however, later on, the Special Bench of the Tribunal in the case of ADIT vs Clifford Chance reported in [2013], (143 ITD 1) has decided the issue in favour of the assessee and against the Revenue, whereby the specific finding of the Tribunal on this issue has been reversed. Accordingly, following the binding precedence of Special Bench in the case of ADIT vs Clifford Chance (supra). We hold that the profits, which are attributable to the PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord, we are inclined to uphold the grievance of the assessee. The reimbursements received by the assessee are in respect of specific and actual expenses incurred by the assessee and do not involve any markup, there is reasonable control mechanism in place to ensure that these claims are not inflated, and the assessee has furnished sufficient evidence to demonstrate the incurring of expenses. There is thus no good reason to make any addition to income in respect of these reimbursements of expenses. The action of the CIT(A), as learned counsel rightly contends, on pure surmises and conjectures. In view of the above discussions, we direct the AO delete the disallowance of expenses as sustained by the CIT(A) and hold that no part of reimbursements of expenses received by the assessee, on the facts of this case, be treated as income of the assessee. The assessee gets the relief accordingly. On quashing the initiation of penalty proceedings . 13. Thus, respectfully following the same, we allow these grounds in favour of the assessee and against the revenue that the entire reimbursement of expenses here in the facts of the assessee s case cannot be treated as income. 25. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds in favour of the assessee and against the revenue that the entire reimbursement of expenses here in the facts of the assessee s case cannot be treated as income. 14. So far as issues raised in ground no. 7, 8 9, the Ld. Senior Counsel for the assessee submitted that, as of now, the issues raised in these grounds have become purely academic. Accordingly, ground no. 7, 8 9 are treated as infructuous, being purely academic in view of the issues decided in the foregoing grounds. 5.3. We have gone through the facts of the case and find that the facts are similar and issued decided by the Tribunal is identical and therefore, we allow these grounds in favour of the assessee and against the Revenue and direct the AO to follow the aforesaid order of the Tribunal. 26. Respectfully following the above decision and following the principle of consistency, the view taken by the Coordinate Bench in A.Y.1995-96 and A.Y. 2003-04 is respectfully followed, grounds raised by the assessee are, accordingly, allowed. 27. With regard to, Ground No. 5 which is in respect of deletion of interest levied u/s. 234B of the Act. Ld. AR of the assessee brought to our notice that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Delhi High Court has expressed the view that the assessee, having denied its liability to pay income tax right from the beginning, should not take the plea that the Indian payers should have deducted tax at source from the remittances made to it. Accordingly the Hon ble Delhi High Court has held that, where the revenue has been deprived of use of monies and thereby put to loss for no fault on its part and where loss arose as a result of vacillating stands taken by the assessee, it is not expected of assessee to shift responsibility to Indian Payers. Accordingly, the Hon ble Delhi High Court has upheld levy of interest u/s 234B of the Act. 14. On the contrary, the Ld A.R placed strong reliance on the decision rendered by the Hon ble Bombay High Court in the case of DIT Vs. Ngc Network Asia LLC (313 ITR 187)(Bom), wherein the Hon ble jurisdictional High Court has held that when a duty is cast on the payer to pay tax at source, on failure, no interest can be imposed on the payee. 15. We have heard the rival contentions on this issue. Though the reasoning given by the Hon ble Delhi High Court (referred supra) is appealing, yet we are unable to follow the said decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable on the facts of the present case, this finding does not really come to the rescue of the assessee since, as we have already held, the assessee did have a PE in India under Article 5(2)(k) of the India UK tax treaty, and, accordingly, profits attributable to the PE are taxable under Article 7 of the India UK tax treaty. 36. Respectfully following the above decision and following the principle of consistency, the view taken by the Coordinate Bench in A.Y.1995-96 respectfully followed, accordingly Ground Nos. 7 and 8 raised by the assessee are allowed. 37. In the result, appeal filed by the assessee is partly allowed. ITA.NO. 3039/MUM/2008 (REVENUE APPEAL) 38. Revenue has raised following grounds in its appeal: - 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in holding that only the income relatable to the work performed in India is liable for taxation in India. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in directing the Assessing Officer to allow 85% of disbursement claim proportionate to the fee relating to the services rendered in India as compared to total fees. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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