TaxTMI 
TaxTMI 
2016 (9) TMI 6
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....ssued under Section 148. 3. According to the appellant, the assessee has deliberately kept away the income of Malaysian Plantation from Indian Taxation Laws, when the company affairs are controlled in India. Regarding Taxation of Malaysian Income from India, the assessee has raised two facts for consideration, viz., (a) Income from Penang branch of Malaysian Plantation is income derived from plantation in Malaysia and immovable property at Malaysia, and (b) As per article 5(g) of the Double Taxation Avoidance Agreement (In short, "DTAA"), the term "permanent establishment" shall be deemed to include Farm or Plantation. 4. Referring to Article V(3)(e) of the existing DTAA between India and Malaysia, the appellant has contended that the plantation income from Malaysia is taxable in India and accordingly, for the assessment year 2005-06, a sum of Rs. 56,60,224/- has been included in the total income of the assessee and for the assessment year 2006-07, a sum of Rs. 55,92,897/- has been included in the total income. For both the assessment years, the assessment was completed on 30.03.2013, under Section 143(3) r/w. 147 of the Income-Tax Act. 5. Being aggrieved by the assessment....
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....e existing DTAA between India and Malaysia. Heard the learned counsel for the appellant and perused the materials available on record. 7. Before adverting to the merits of the case, let us extract the Articles V and VI of the DTAA between India and Malaysia, "Article V Permanent Establishment: 1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business in which the business of the enterprise is wholly or partly carried on. 2. The term "permanent establishment" shall include especially: a. a place of management; b. a branch; c. an office; d. a factory; e. a workshop; f. a warehouse; g. a mine, oil well, quarry or other place of extraction of natural resources; h. a building site or construction, installation or assembly project which exists for more than six months; i. a farm or plantation; j. a place of extraction of timber or forest produce. 3. The term "permanent establishment" shall not be deemed to include: a. the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; b. the maintenance of a stock of goods ....
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....an independent status, where such persons are acting in the ordinary course of their business. 4. The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other Contracting State whether through a permanent establishment or otherwise shall not of itself constitute either company a permanent establishment of the other. ARTICLE VI Income from Immovable Property: 1. Income from immovable property may be taxed in the Contracting State in which such property is situated. 2. The term "immovable property" shall be defined in accordance with the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, oil wells, quarries and other places of extraction of ....
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....e or spring from the asset, although the operation by which the profits or gains is made to arise out of the asset is the operation of the sale and consequently, there is no warrant for the submission that the capital gain is not income arising from the use of the assets. The provisions of article VI alone would apply and govern the assessment of capital gains also derived from the immovable property situated at Malaysia." 9. In CIT v. P.V.A. Kulandagan Chettiar reported in 2004 (267) ITR 654 (SC), the Hon'ble Supreme Court, at Paragraph 12, held as follows: "12. The immovable property in question is situate in Malaysia and income is derived from that property. Further, it has also been held as a matter of fact that there is no permanent establishment in India in regard to carrying on the business of rubber plantations in Malaysia out of which income is derived and that finding of fact has been recorded by all the authorities and affirmed by the High Court. We, therefore, do not propose to reexamine the question whether the finding is correct or not. Proceeding on that basis, we hold that business income out of rubber plantations cannot be taxed in India because of closer....