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TMI Blog2023 (1) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication of Article 7 of DTAA entered into between the Government of United Arab Emirates and the Republic of India applies only in cases where the assessee earns profit - whether any taxable income could be attributed to PE, would not arise in the event, the assessee incurs a loss? HELD THAT:- As noted that although the observations made in the said decision appear to be squarely in favour of the appellant, it is also apparent that various other contentions relevant for addressing the said question have not been considered. This is also perhaps because the Court had not framed any question regarding the applicability of Article 7 of the DTAA. Prima facie, this Court is of the view that if Article 7(1) of the DTAA which concerns with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to between the Government of United Arab Emirates and the Republic of India applies only in cases where the assessee earns profit. 3. If it is accepted that Article 7 of the DTAA doesn t apply; the questions that would next follow are whether DTAA applies in the context where there is a loss, and whether recourse to DTAA is necessary for taxing the income of a permanent establishment in India as an independent assessee. 4. According to the respondent, notwithstanding that an overseas entity incurs a loss, if there is positive income attributable to the PE, the same would be taxable notwithstanding Article 7(1) of the DTAA. 5. Mr. Ganesh submits that the aforesaid questions are squarely covered by the decision of the coordinate Bench of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 7(1) of the DTAA which concerns with the attribution of profits of the assessee is not applicable in case the assessee incurs a loss, the other provisions of the Income Tax Act, 1961, would be applicable and any income arises or accrues within the territories of India would be chargeable to tax. 9. Prima facie, if the establishment in India is generating profits, but the other entities of the assessee overseas are incurring a loss, the profits generated by the establishment, if otherwise chargeable under the Income Tax Act, would be required to be assessed and taxed. 10. In this view, we are inclined to observe that the aforesaid issue be referred to a larger Bench. 11. Mr. S. Ganesh submits that there are other questions which aris ..... X X X X Extracts X X X X X X X X Extracts X X X X
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