TaxTMI 
TaxTMI 
2009 (11) TMI 84
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....ssee has taken up three grounds in the appeal. Ground No. 1 is to the effect that on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of the AO in not excluding the amount of commission retained by Turner International India (P) Ltd. (TIIPL for short), an Indian company, thereby determining the total income of the assessee at 10 per cent of the gross receipts instead of actual amount received, while giving effect to MAP resolution. It is further mentioned that he erred in not appreciating that non-exclusion of the amount retained by TIIPL led to double taxation of the same amount, once in the hands of the TIIPL and then in the hands of the assessee company, thereby defeating the very purpose of MAP resolution agreed upon. It is also mentioned that he erred in holding that the order of the AO, giving effect to the MAP resolution, was an order under s. 154, without appreciating that such an order amounted to an order under s. 143(3) of the Act. Ground No. 2 is against charging of interest under s. 234B and ground No. 3 is against charging of interest under s. 234C. Ground Nos. 4 and 5 are general and residuary in nature, whi....
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....ting the profit. 2.3 Before us, the learned counsel referred to the original order passed by the AO on 27th March, 2006, a copy of which was placed in the paper book on pp. 5 to 13. In the closing part of the order, it was mentioned that the assessee has not maintained any India specific account. However, since it must have incurred expenses on transmission, programming, distribution etc., it would be reasonable to attribute 30 per cent as profit attributable to India. Thereafter, the profit of the assessee was worked out at Rs. 1,56,80,211 as under: "Advertising revenue from India (Net of US $ 12,99,318 agency commission) Less: India rep. commission US $ 1,95,000 Net advertising income US $ 11,04,318 &nb....
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....-------------- Total 58,50,60,553 1,19,29,083 11,92,908 ---------------------------------------------------------------- 2.5 The learned counsel also referred to the resolution of the Indian competent authority dt. 23rd April, 2007, in which it was inter alia mentioned that TENA, TBSAP and CNN have PE in India during the relevant previous years and 10 per cent of the advertising and subscription revenue received during the relevant previous years is deemed to be the net profit chargeable to tax. The net profit in these cases will be calculated using advertising and subscription revenue each entity received from Indian sources for the years at issues. Since correlative relief for TENA, TBSAP and CNN's respective share of profit allocated to TIIPL pursuant to transfer pricing orders has been included in determining the deemed net profit of 10 per cent, no further relief will be available. 2.6 The learned counsel also referred to sub-r. (4) of r. 44H containing a provision that the effect to the resolution arrived at under mutual agreement procedure shall....
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....s the whole purpose of mutual agreement proceedings is to bring the litigation to an end. In this connection, reliance was placed on the decision of Hon'ble Kerala High Court in the case of Kerala State Civil Supplies Corpn. Ltd. vs. Jt. CIT (2006) 200 CTR (Ker) 653 : (2006) 282 ITR 647 (Ker). 2.9 Further, she referred to the resolution of the USA competent authority, in which it was mentioned that correlative relief was granted in respect of USA taxable income, as per Internal Revenue Manual-4.60.3 Tax Treaty Related Matters, a copy of which was placed in the paper book of the Revenue on pp. 5 to 15. Thus, it was her case that there was no question of double taxation of the same amount. 2.10 It was also argued that if deduction is allowed in respect of commission paid to TIIPL from the gross commission receivable by the assessee, then, the profit will not amount to 10 per cent of the commission received from Indian sources. 2.11 Thus, it was argued that the appeal of the assessee is incompetent. There is no question of double taxation of the same amount in view of the correlative relief. And finally, acceptance of assessee's position will amount to computation of profit a....
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....er was finally decided by the Chief CIT. The case of the assessee was that since the appeal was allowed, no further proceedings could be taken up in respect or the order or the AO. The Hon'ble Court rejected this plea by pointing out that the Tribunal had allowed the appeal only for statistical purposes. The AO was directed to refer the matter to the Chief CIT or CIT and the matter was subsequently considered by the Chief CIT. This was in accordance with law and, therefore, it was held that the petition was devoid of any merit. The relevant portion of the judgment is reproduced below for the sake of ready reference: "Since the whole issue depends upon the scope of the Tribunal's order. I have to necessarily refer to the order of the Tribunal. On going through the order of the Tribunal, particularly the operative portion extracted above, I find that the Tribunal has not held that the proceedings initiated by the AO under s. 154 are invalid or without jurisdiction. All that the Tribunal has found is that disallowance of interest for the delay in completion of proceedings resulting in refund should be decided by the CIT or the Chief CIT as required under s. 244A(2) of the Act. So m....
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....order issued by the AO vide Exhibit P-13 are not under s. 154 of the Act. Exhibits P-11 and P-13 are only continuation of the rectification proceedings initiated by the AO under s. 154 of the Act and adjudication by the Chief CIT under s. 244A(2) of the Act forms part of the rectification proceedings originally initiated vide Exhibit P-2. The decisions relied on by the petitioner are rendered prior to the introduction of s. 244A(3) of the Act. As of now, excess interest paid under s. 244A(1) can be demanded under s. 154 of the Act as provided under s. 244A(3) of the Act. Since I find Exhibit P-12 demand is pursuant to Exhibit P-13 order which is a rectification order issued under s. 154 of the Act, the challenge against the demand is unsustainable. I find the assessee has no dispute on the merits in as much as it has no contest against Exhibit P-11 by which the Chief CIT has refixed the eligible interest to it under s. 244A(2) of the Act. For the foregoing reasons. I find no substance in the technical objection raised by the petitioner against the demand notice. O.P. is therefore devoid of any merit and is dismissed." The facts of this case are that an assessment under s. 143(3)....
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....ected to in any manner by the Indian competent authority. Thus, the terms of mutual agreement are very clear that the profit has to be worked out at 10 per cent of the advertising and subscription revenue received from Indian sources or more precisely at US $ 1,10,432. The agreement has to be given effect to because of the provision contained in s. 90. The only pre-conditions for giving effect to the mutually agreed resolution are mentioned in sub-r. (3) of r. 44H. The assessee has given the consent for implementation of the agreement and the appeal against the order is stated to have been withdrawn. Therefore, there is no impediment in giving effect to the resolution as it is. The order so passed is an order under s. 143(3) r/w s. 90 and it is in substitution of earlier order under s. 143(3). In view of the resolution, we find that the learned CIT(A) erred when he upheld the order of the AO in which the profit was determined at 10 per cent of the gross revenue. The learned Departmental Representative also raised the issue as to whether the assessee could litigate on this matter after resolution of the dispute through MAP proceedings. We do not find any justification in this argume....
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.... The relevant portions of this order, of which the undersigned was the author, are contained in paras 3 and 3.1, which are reproduced below for the sake of ready reference: "3. We have considered the facts of the case and rival submissions. The order of the competent authority, India, was that interest will be chargeable as per provisions of the IT Act, 1961. According to us, this part of the order means that if the interest is found chargeable under s. 234B, it shall be charged. However, if interest is not found to be chargeable as per law, then, this part of the order cannot be read to mean that the assessee shall still be liable to pay interest. The learned counsel for the assessee fairly conceded before us that if the interest is found to be chargeable, the same will have to be charged. However, his argument was that the interest is not chargeable as no advance tax was payable by the assessee. It may also be mentioned here that he did not raise any dispute regarding the mandatory nature of the levy of interest and that only the Board and not the Tribunal had the powers to waive or reduce the levy. Thus, the question before us is whether the interest is chargeable under the A....
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...., that there were conflicting decisions of the Tribunal in the matter and that the levy was made without hearing the assessee. These factors do not exist in this case. The finding of the Court was that the imposition of interest under s. 234B was not justified inter alia because the tax payable in advance has to be reduced by the amount of tax which was deductible at source. Looking to the provisions contained in ss. 209 and 195 and the aforesaid decisions, it is clear that the assessee was not liable to pay any advance tax. In such circumstances, there would also be no liability to pay interest under s. 234B notwithstanding the fact that this provision, for the purpose of assessed tax, uses the words 'any tax deducted or collected at source'. In other words, the charge of interest will follow only if there is a default of non-payment of advance tax. In absence of the default, the interest cannot be charged." Following the aforesaid order, it is held that the assessee was not liable to pay interest under s. 234B. Similar consideration will prevail in respect of interest under s. 234C. Therefore, it is also held that the assessee was not liable to pay interest under s. 234C. The ....