MAP-based consistency upheld for advertisement and subscription receipts; section 234B interest denied for a withholding-taxed non-resident.

Consistent MAP-based treatment of identical advertisement and subscription receipts justified taxing only 10% of the revenues as business income in India, since the same receipts had been accepted on a business-income basis in earlier and later years and no perversity was found in following that approach. For a non-resident whose income was fully subject to tax withholding under section 195, no advance tax obligation arose and interest under section 234B could not be levied. The relief granted to the assessee was therefore sustained on both issues.

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Issues: (i) Whether the assessee's advertisement and subscription revenues were taxable only to the extent of 10 per cent as business income in India. (ii) Whether interest under section 234B of the Income-tax Act, 1961 was leviable on the non-resident assessee.

Issue (i): Whether the assessee's advertisement and subscription revenues were taxable only to the extent of 10 per cent as business income in India.

Analysis: The Revenue sought to treat the subscription receipts as royalty and to tax the full amount, while the assessee relied on the earlier MAP resolution, the treatment given in preceding years, and the consistent approach adopted in later assessment proceedings. The appellate record showed that the dependent-agent PE issue had already been accepted in the assessee's case, and that the same stream of advertisement and subscription revenues had been assessed on a business-income basis in line with the MAP framework. The Tribunal found no perversity in the first appellate authority's reliance on consistency and the earlier comparable treatment of the same receipts.

Conclusion: The determination that only 10 per cent of the advertisement and subscription revenues would be taxed as business income in India was upheld, in favour of the assessee.

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 and its income was subject to deduction of tax at source. The Tribunal followed jurisdictional authority holding that where the payer was required to withhold tax under section 195 and the entire income was so liable, there was no obligation to pay advance tax, and consequently no liability to interest under section 234B arose.

Conclusion: Interest under section 234B was held not leviable, in favour of the assessee.

Final Conclusion: The Revenue's appeals failed on both substantive grounds, and the assessee's objections were not pursued. The orders granting relief to the assessee were sustained.

Ratio Decidendi: Where identical or substantially similar receipts have been consistently taxed in earlier and subsequent years under a MAP-based arrangement and the facts show a taxable business connection, consistency may justify continued adoption of the same tax treatment; further, a non-resident whose income is fully subject to withholding under section 195 is not liable to advance tax and therefore no interest under section 234B can be levied.

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