Tax Court: No Permanent Establishment in India for 2003-04 Assessment

The court held that the assessee had no permanent establishment in India for the assessment year 2003-04. The applicability of sec. 40(a)(ia) was dismissed as not pressed by the counsel. Disallowances under sec. 40(a)(i) for payments made to various entities were allowed or deemed bad in law based on previous decisions. The assessee's appeal was allowed in part, while the Revenue's appeal was dismissed. The order was pronounced on May 28, 2012.

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Issues Involved: Cross appeals for the assessment year 2003-04 regarding permanent establishment in India, applicability of sec. 40(a)(ia), disallowance u/s.40(a)(i) for payments made to various entities.

Assessee's Appeal (ITA No.3866/Mum/2008):
- Ground nos.1 & 2: Whether the assessee has a permanent establishment in India.
- Held that the assessee has no permanent establishment in India, consistent with previous assessment years.
- Ground no.3: Applicability of sec. 40(a)(ia).
- Not pressed by the counsel and hence dismissed.
- Ground no. 4: Disallowance u/s.40(a)(i) for payment to Advanced Satellite (UK).
- Allowed in favor of the assessee based on previous decision.
- Ground no.5: Disallowance u/s.40(a)(i) for payment to LMB Holdings (Mauritius) Ltd.
- Disallowance deemed bad in law, consistent with previous decision. Assessee's ground allowed.
- Ground no. 6: Disallowance u/s. 40(a)(i) for payment to LMB Holdings Ltd. (Isle of Man) for films.
- No liability to deduct tax at source u/s.195, hence no disallowance u/s. 40(a)(i). Assessee's ground partially allowed.

Departmental Appeal (ITA No.4098/Mum/208):
- Issue: Disallowance u/s. 40(a)(i) for payment to PanAmSat Ltd.
- Upheld the order of CIT(A) based on previous decision. Revenue's ground dismissed.

Conclusion:
- Assessee's appeal allowed in part, while the Revenue's appeal is dismissed. Order pronounced on May 28, 2012.

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