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TMI Blog2024 (6) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... 148A (b) notice, the petitioner had specifically alluded to the judgment rendered in Engineering Analysis Centre of Excellence (P.) Ltd [ 2021 (3) TMI 138 - SUPREME COURT] to contend that the monies received from the sale/re-sale of shrink-wrapped software would not amount to royalty so as to be taxable. It had additionally also questioned the initiation of action based on its assertion of no PE existing in India. As is evident from order u/s 148A (d) those objections have been perfunctorily disposed of with the respondent observing that whether the revenue earned from the sale of software would amount to royalty would require further verification. Similarly, while dealing with the issue of PE it has chosen to observe that the same is a qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on material gleaned from the Non-Filing Monitoring System of the Department and pertaining to Assessment Year [ AY ] 2020-21. 2. The respondents took the position that on the basis of the information appearing on the Insight Portal it appears that various payments were made to the writ petitioner and in respect of which tax had been deducted at source by various entities. It, accordingly, alleged that income amounting to INR 6,52,46,913/- remained unexplained and appears to have escaped assessment. 3. In response to the aforesaid notice the petitioner in terms of its reply dated 12 March 2024 explained that it was an overseas entity incorporated in Japan and is engaged in the supply of software. It was further averred that it procures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017] 80 taxmann.com 347 (SC) III. Ishikawajma-Harima Heavy Industries Ltd. vs. Director of Income-tax reported as [2007] 158 Taxman 259 (SC) IV. Hyundai Heavy Industries Co. Ltd. vs. Director of Income-tax (International Taxation) reported as [2007] 161 Taxman 191 (SC) 4.2 From the bare perusal of the captioned judgment, you will appreciate that the Hon ble Apex Court has been consistent in its stand that the existence of a PE is a prerequisite for taxing the business profits in the source country. Hence, in the case at hand, as there is no PE in India (of any type), the Business Income earned from Indian customers is not chargeable to tax in India. 4.3 At the cost of duplicity, we would like to bring on record that the question of un-expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was required to file the ITR, declaring the income and justifying the claim that the income is exempt for India. Hence, prime facia it appears that assessee has not substantiated the non taxability of the receipts received by it. 7. We find ourselves unable to sustain the initiation of reassessment action bearing in mind the evident failure on the part of the respondent to deal with the fundamental challenge to reassessment as were raised by the petitioner. As would be evident from a perusal of the reply which was submitted to the Section 148A (b) notice, the petitioner had specifically alluded to the judgment rendered by the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd. vs. CIT [(2021) 432 ITR 471(SC)] to contend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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