TaxTMI 
TaxTMI 
2014 (5) TMI 48
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.... made under section 143(3) read with section 144C(13) for assessment year 2009-10 is wrong and bad in law. 2. On the facts and in the circumstances of the case and in law the learned Assessing Officer erred in assessing the royalty received by the appellant from Warner Bros. Pictures (India) Pvt. Ltd as business income u/s 5(2)19(1) (i) of the Income-tax Act, 1961 pursuant to the directions given by the Hon'ble Dispute Resolution Panel -Il, Mumbai vide their order dated 03/09/2012 when in the case of Warner Bros. Pictures Inc. (the predecessor company), for AY. 2006-07 the claim of the assessee that the royalty received by it is not taxable either under the Income-tax Act, 1961 or India - USA DTAA is accepted by the Hon'ble ITAT, "L" Bench....
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....09/2012, even though the TPO has accepted that the royalty paid by Warner Bros. Pictures (India) Pvt. Ltd to the appellant is at arm's length. 5. On the facts and in the circumstances of the case and in law the learned Assessing Officer erred in holding that 65% would be the profits attributable to the alleged DAPE in India which amounts to Rs 2,16,25,721 pursuant to the directions given by Dispute Resolution Panel -II Mumbai vide their order dated 03/09/2012 when cogent evidence was produced before the AO/DRP-II that during the year under consideration the assessee company's world vide operating loss from distribution of films is 18.58%. 2. The assessee is a tax resident of USA and is engaged in the distribution of cinematographic films.....
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....ain received as consideration for the use of any copyright or literary, artistic or scientific work including cinematographic films or work on films, tape or other means of production for use in connection with Radio or TV. broadcasting. In view of this specific provisions, the amount received by the assessee cannot be considered as royalty as was done by the Assessing Officer while invoking the Article 12(2) of the DT for taxing the amounts. To that extent the findings of the CIT (A) are correct and there is no need to deviate from such findings. In view of this the amount received by the assessee cannot be considered as royalty within the meaning of Indian Income Tax Act or under the DTAA. 10) The issue can be examined in another dimensi....
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....s attributed to permanent establishment. In this case, the assessee does not have any permanent establishment in India. Since the Indian company who obtained the rights is acting independently, Agency PE provisions are not applicable to the assessee company. The assessee relied on the decision of Ishikawajma-Harima Heavy Industries Ltd vs. Director of Income Tax 2007-(158)- TAXMAN 0259-SC that incomes arising to a Non-Resident cannot be taxed as business income in India, without a PE. As the assessee does not have any permanent establishment in India, the incomes arising outside Indian Territories cannot be brought to tax. Therefore, there is no need to differ from the findings of the CIT (A) and accordingly the Revenue Appeal is dismissed.....