TaxTMI 
TaxTMI 
2016 (5) TMI 849
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....5 of India UK Double Taxation Avoidance Agreement ("DTAA"). 3.The Ld. DRP and Ld. AO erred in holding that the assessee has a service PE in India under Article 5(2)(k) of the DTAA without appreciating that: - -Technology Transfer Agreement ("TTA") dated March 5, 2004 read with Intellectual Property Agreement ("IPA") dated December 17, 2007 and International Personnel Assignment Agreement ("IP AA") dated December 5, 2005 are independent contracts for materially different purposes. -IP AA between JC Bamford Excavators Limited ("JCBE") and JCB India Limited ("JCB India") provides for employees sent by JCBE to JCB India on deputation (secondment) which is admittedly as per specific requirements of JCB India and not for services in relation to TTA or IPA. -Seconded employees sent as per arrangement under IPAA are employees of JCB India. 4. Without prejudice to Ground No. 3, under the facts and circumstances of the case and under law, the Ld. DRP and Ld. AO has grossly erred in holding that Royalty earned by the assessee is effectively connected to alleged service PE of the assessee in India and has failed to appreciate that: -Intangible property in respect of which Royalty h....
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....d in levying interest under Section 234A, 234B, 234C and 234D of the Act. 10. The Ld. AO erred in initiating penalty proceedings under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income. That the above grounds of appeal are without prejudice to each other. That the appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal." 3. Grievance of the assessee vide ground nos. 1 to 3 is that as to whether the assessee has permanent establishment (PE in India or not ). As regards to this issue the ld Counsel for the assessee at the very outset stated that this issue has been decided against the assessee vide earlier order dated 4.7.2014 in ITA no. 80/Del/2013 for the assessment year 2008-09 and order dated 8.4.2015 in ITA no. 6573/Del/2014 for the assessment year 2010-11. The ld. DR in his rival submissions submitted that this issue has already been decided against the assessee in assessee's own case in the preceding assessment years. 4. After considering the submissions of both the parties, it is noticed that this issue has been decided against the assessee in the preceding year v....
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....een JCBE and JCBI under the Technology Agreement. The AO held that the above details coupled with the fact that JCBE received 99.5% of royalty from the assessee left nothing to doubt that there was service PE of the assessee as per Article 5(2)(k) of the DTAA covered within the ambit of 'other personnel'. Since this position has been candidly accepted by the ld. AR as well, we, therefore, refrain from any independent evaluation of this aspect. The ld. AR accentuated that his objections against the holding of the service PE of the assessee in India were practically the same which were taken for the earlier years. The tribunal has discussed and jettisoned such objections in its order for the A.Y. 2006-07. Under such circumstances and following the precedent, we hold that all the requisite conditions for attracting the mandate of Article 5(2)(k) are satisfied inasmuch as (i) there is furnishing of services including managerial services; (ii) such services are other than those taxable under Article 13 (royalties and fees for technical services); (iii) such services are rendered out of India; (iv) such services are rendered by 'other personnel'; and (v) such activities continued for a p....
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....ting or making it available to JCB India. That is how the Tribunal came to hold that the same was not effectively connected with the service PE of the assessee in India. The amount of royalty and consideration for rendering of services by the employees of second category has been held to be not falling in para 6 of Article 13 and hence chargeable to tax as per para 2 of Article 13 of the DTAA. However, as regards the fees for technical services resulting from the rendering of services by the employees of the second category, the Tribunal has held that the same did not fall in para 6 of Article 13 and was, hence, chargeable to tax as per para 2 of the Article 13 of the DTAA. As regards the consideration for the employees of the first category, the Tribunal has held that the fees for technical services in relation to such employees was covered within para 6 of Article 13 of the DTAA. That is how, the Tribunal concluded that the consideration for rendering of services by the employees of first category was chargeable to tax under Article 7 of the DTAA. The AO was directed to determine the amount of income in terms of Article 7. As the facts for the instant year are admittedly simila....