Permanent establishment and royalty dispute resolved by binding precedent; non-resident interest under section 234B not leviable.

Where the material facts and contracts remained unchanged from earlier years, the Tribunal held that it was bound by the jurisdictional High Court's decision in the assessee's own case and could not sustain a contrary view on the basis of vague, un-confronted later material. On that footing, the income from supply of telecom equipment and software was not brought to tax in India as business profits or royalty under the Indo-Swedish treaty. For the same reason, interest under section 234B was not leviable on the non-resident assessee. The additions and consequential levy therefore did not survive.

---

---

Issues: (i) Whether the assessee had a permanent establishment in India and a dependent agent under the Indo-Swedish Double Taxation Avoidance Agreement, and whether the income from supply of telecom equipment and software was taxable in India as business profits or royalty; (ii) Whether interest under section 234B of the Income-tax Act, 1961 was leviable on the non-resident assessee.

Issue (i): Whether the assessee had a permanent establishment in India and a dependent agent under the Indo-Swedish Double Taxation Avoidance Agreement, and whether the income from supply of telecom equipment and software was taxable in India as business profits or royalty.

Analysis: The assessee's case for the years in question was found to be on the same factual footing as the earlier years. The Assessing Officer had himself recorded that the facts and contracts remained unchanged. The appellate authority's reliance on survey material was not accepted because the material was not specifically identified, not confronted to the assessee, and no clear nexus with the relevant assessment years was shown. The attempt to distinguish the earlier binding decision on the basis of later developments, cost-recharge clauses, software valuation, and a DRI notice was rejected as either irrelevant or insufficient to alter the legal character of the transactions. The Tribunal held that it was bound by the jurisdictional High Court decision in the assessee's own case and that the Revenue could not set up a fresh case beyond the assessment order.

Conclusion: The issue was decided in favour of the assessee. The Tribunal held that the earlier judgment governed the matter and that the income from the relevant supplies was not to be assessed on the new factual basis advanced by the Revenue.

Issue (ii): Whether interest under section 234B of the Income-tax Act, 1961 was leviable on the non-resident assessee.

Analysis: The assessee was a non-resident company, and the question of levy of interest under section 234B was covered by the jurisdictional High Court decision relied upon by the Tribunal.

Conclusion: The issue was decided in favour of the assessee and the interest levy was not sustained.

Final Conclusion: The appeals were allowed and the additions and consequential levy challenged by the assessee did not survive.

Ratio Decidendi: Where the material facts remain unchanged from earlier years and the jurisdictional High Court has already decided the same controversy in the assessee's own case, the Tribunal is bound by that decision and cannot sustain a contrary view on the basis of vague or un-confronted later material.

---