TaxTMI 
TaxTMI 
2010 (9) TMI 627
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....titled to the benefits of DTAA between India and Germany and directing the Assessing Officer to charge tax as per the provisions of the DTAA. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the assessee is not liable to pay any advance and hence interest under section 234B and interest under section 234C cannot be charged." 2. The assessee filed its Original Return of Income for the year ended 31st March, 2005, relevant to the Assessment Year 2005-06, on 31/10/2005 in Form No.2D declaring total income of Rs.33,966,412, being royalty income earned by them from Chiron Behring Vaccines Pvt. Ltd.("CBVPL"). The Royalty income earned was offered to tax at 10% on g....
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....rticle-4 of the DTAA defines "Resident" for the purpose of the DTAA as follows: ARTICLE 4 - Resident - 1. For the purposes of this Agreement, the term resident of a Contracting State means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein. 5. If Article-12 is held to be not applicable to the Assessee, then the Tax rate chargeable under the provisions of the Act will be 20% as provided under Section 115A of the Act. The relevant provisions of the Act ....
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....gement or any criterion of a similar nature. But it does not include ...................." According to the assessee it was liable to pay Gewerbesteur ('trade tax") in Germany. Trade tax is the tax paid with reference to the income earned by the German entity. The assessee thus claimed that it was a resident under the Article 4 of DTAA. According to the assessee under Article 2 of the DTAA between India and Germany the term 'tax' has been defined to cover amongst other, trade tax levied in Germany as reproduced below. "There shall be regarded as taxes on income and on capital imposed on total income on total capital, or on elements of income or of capital including taxes on gains from the alienation....
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....ween India and Germany would not be applicable to the assessee. The AO was of the view that the assessee was not liable to tax in Germany and, therefore, was not resident of Germany... 6. On appeal by the assessee the CIT(A) noticed that the very same issue was considered by the CIT(A) in assessee's own case in A.Y 2002-03 and it was held that the assessee was liable to pay tax in Germany and was, therefore, a resident of Germany and was entitled to the benefit of DTAA. The CIT(A), therefore, held that the royalty income has to be assessed to tax @10% as provided in Article 10 of the DTAA. 7. Aggrieved by the order of the CIT(A) the revenue has preferred the present appeal before the Tribunal. 8. After considering....