TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 609
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....ys India Services Pvt. Ltd. (hereinafter referred to as "CISPL"). CISPL renders back office services exclusively to the petitioner-company. 2. In respect of the assessment years 2002-03 and 2004-05, notices for reopening the assessments were issued by the first respondent on 30.3.2007. There were three broad grounds upon which the assessments were sought to be reopened. The first was that the financial statements of CISPL, the subsidiary company of the petitioner, showed that the petitioner received certain payments which in substance represented "fees for technical services" within the meaning of Section 9(1)(vii) of the Income Tax Act, 1961 ('Act', for short) paid in the guise of reimbursement of salary of its employees rendering service....
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.... petitioner was permitted to file objections to the reopening of the assessments, which were directed to be decided by a speaking order including the preliminary issue of jurisdiction. The writ petition was disposed of in these terms. 4. The petitioner thereafter filed detailed objections to the notices issued under Section 148 raising various contentions, the summary of which is this: (a) the petitioner was not liable to file any returns of income in India since no income accrued or arose to it in India under the Act read with the Indo-US Tax Treaty. The first respondent therefore did not have any jurisdiction to issue the notices to the petitioner; (b) CISPL had withheld the applicable taxes on the interest income and there....
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....income chargeable to tax had escaped assessment; (b) no case has been made out in the reasons recorded to show escapement of income chargeable to tax; (c) no dealings between the petitioner and CISPL have been pointed out in the reasons recorded nor was there anything to justify the finding of business connection. With reference to the fees for technical services, it was submitted that just because one employee was seconded by the petitioner to CISPL and was paid salary by CISPL it cannot be assumed, without anything more, that the salary paid to that employee represented fees for technical services in the hands of the petitioner and in support of this submission a copy of the circular No.5 issued by the CBDT on 28.9.2004 was relied upon. W....
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.... material for reopening the assessments on the ground of escapement of income. Reliance was placed on the judgment of this Court in Reach Cable Networks Ltd. v. Deputy Director of Income Tax [2008] 299 ITR 316. It was accordingly contended that the notices issued under Section 148 were valid and the first respondent was justified in rejecting the objections of the petitioner. 9. On a careful consideration of the matter we are of the opinion that there is no merit in the petition. It is a well settled proposition that at the time of issuance of the notices under Section 148, the Assessing Officer is not expected to form any definite or conclusive opinion about the taxability of the disputed amounts and that he is only expected to form a ten....
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....s at the disposal of the petitioner. This would also mean that apart from the prima facie existence of a business connection there is also material to entertain the belief that CISPL is a permanent establishment of the petitioner in India. It has been held in Commissioner of Income Tax, Punjab v. R D Aggarwal and Co. and Anr. [1964] 56 ITR 20 as under : "The expression "business" is defined in the Act as any trade, commerce, manufacture or any adventure or concern in the nature of trade, commerce or manufacture, but the Act contains no definition of the expression "business connection" and its precise connotation is vague and indefinite. The expression "business connection" undoubtedly means something more than "business". A business conne....
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....clear on behalf of the petitioner in the course of the arguments that the argument against the notices would proceed on the basis that the petitioner had a PE in India. If that much is admitted, the tax implications of having a PE in India both under the Act and under the Double Tax Avoidance Agreement would fall to be examined. The assessing officer was therefore justified in taking the prima facie view that CISPL constituted the petitioner's permanent establishment in India. 13. So far as the assessability of the interest under Section 9(1)(v) is concerned it would appear that clause (b) of Section 9(1)(v) is applicable. Under this clause income by way of interest payable by a resident is taxable in the hands of the non-resident, except ....