TaxTMI 
TaxTMI 
2015 (9) TMI 1532
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....eth, Dr. (Shri) Narendra Kumar, S/Shri S. E. Dastur/Niraj Sheth, Dr. (Shri) Narendra Kumar, S/Shri S. E. Dastur/Niraj Sheth, ORDER PER AMIT SHUKLA, AM: The aforesaid appeals have been filed by the assessee as well as by the revenue against separate impugned orders passed by CIT(A)-XXXIII, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment years 1998-99, 1999-00, 2000-01 & 2001-02 respectively. Since the issues involved in all the appeals are common arising out of identical set of facts therefore, same were heard together and are being disposed off by way of this consolidated order. 2. For sake of convenience and understanding the issues involved we will take-up assessee's appeal for the assessment year 1998-99 being ITA No. 1355/Mum/2004 vide which, following grounds have been raised :- "1. The learned Commissioner (Appeals) ought to have directed the Assessing Officer to determine the total income of the appellant at Rs. Nil as returned by the appellant. 2. The learned Commissioner (Appeals) erred in holding that the appellant had a permanent establishment in India under Article 5(2)(k) of the Tax Treaty between India and U.K. The learned C....
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....pellant vide letter dated March 27, 2001 regarding the position under the Income-tax Act. 9. The learned Commissioner (Appeals) erred in not directing the Assessing Officer alternatively to assess to tax only the fees of Pounds Sterling 139,924.64, being the amount assessable under the Income-tax Act". 3. At the outset set Ld. Senior Counsel, Shri S. E. Dastur submitted that most of the issues raised in the aforesaid grounds are either covered by the earlier orders of the Tribunal or have been rendered academic in light of such orders. In support, he filed a detailed chart of the issues raised and how they are covered by the orders of the Tribunal. Ld. DR also admitted that all the grounds raised are covered. 4. The assessee is a partnership firm in United Kingdom, which is mainly engaged in the practice of law and providing professional services in various field to the clients all over the world. Its professional operations extend to India also, which services are provided by the Partners and staffs in UK. We will now take-up ground wise issue, as raised by the assessee. 5. In ground no. 2, the assessee has challenged the issue of Permanent Establishment in India under....
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....l services or independent personal services or included services exist under art. 15, when services are rendered by the enterprise, art. 5(2)(k) will come into play, and when services are rendered by an individual, art. 15 will find application. Therefore, while we agree with the learned counsel that art. 15 will not be applicable on the facts of the present case, this finding does not really come to the rescue of the assessee since, as we have already held, the assessee did have a PE in India under art. 5(2)(k) of the India-UK tax treaty, and, accordingly, profits attributable to the PE are taxable under art. 7 of the India-UK tax treaty. 107. In view of the above discussions, we are unable to uphold the plea so strenuously argued by the learned counsel for the assessee, and we hold that the authorities below have rightly invoked the provisions of art. 5(2)(k). We approve the same, and decline to interfere in the matter. On adjustments required claimed by the assessee in earnings of the PE, on the basis of prevailing market prices of similar services, in view of independence fiction of art. 7(2)." 9. Thus, respectfully following the earlier years orders and the judicial prec....
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...., which at best is the market price of such services rendered in India. It was submitted that when profits attributable to P.E. in India are to be computed, one has to take into account the revenue that the P.E in India would have earned, for rendering these services and prevalent market rates in India. These issues were decided against the assessee and thus, it was submitted by Ld. AR that the issues raised in Ground No.3 & 4 are also covered against the assessee by the aforementioned decision. For the sake of completeness the conclusion of the Tribunal as found in para 130 is reproduced below: "130. In view of the above discussions, in our considered view, the very plea of the assessee proceeds on fallacy that arm's length price adjustment can be made in respect of the transactions with the clients of the assessee. The revenues earned by the assessee are to be taken at actual figures and no adjustments are permissible in the same. We reject this plea of the assessee as well. The action of the authorities below is confirmed on this count as well." 4.1 Accordingly, after hearing both the parties, Ground No. 3 & 4 are decided against the assessee and are dismissed. ....
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....up revenue's appeal for assessment year 1998-99, being ITA No.1712/Mum/2004 vide which following grounds have been raised :- "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified in holding that the assessee was taxable in respect of only that portion of income that was related to the services performed in India. The Ld. CIT(A) has not appreciated the 'force of attraction' principle in Article 7 of the Indo-UK DTAA. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that interest u/s 234B of the I.T. Act, 1961 was not chargeable in the case of the assessee on the ground that in the case of a non resident assessee, all sums chargeable to tax are liable to deduction of tax at source under section 195 of the Income-tax Act. 1961. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified in giving relief in respect of the disbursement particularly when complete details were not produced by the assessee. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified in directing the AO to exclude the receipt....
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....lowing the binding precedence, direct the Assessing Officer to delete the interest charged u/s 234B. 21. As regards issue raised in ground no. 3, that is, restricting the disallowance of reimbursement to the extent of 25% as against 100%, it has been pointed by Ld. Senior Counsel that the Tribunal has already held that no amount is disallowable and this ground is similar to ground no. 5 & 6 of the assessee's appeal. Accordingly, in view of the finding given therein that none of the reimbursement of expenses amount can be considered as income of the assessee this issue is decided in favour of the assessee and against revenue. Accordingly, ground no. 3 as raised by the revenue is dismissed. 22. So far as the issue relating to ground no. 4 that is, Ld. CIT(A) has erred in excluding receipts from Serium Institute of India Ltd, it has been admitted by both the parties that this issue is not arising in this year and, therefore, no adjudication is required. Accordingly, the issue raised in ground no. 4 is treated as dismissed as there is no receipt of this kind in this year. 23. Lastly, regarding ground no. 5 relating to denial of benefit under Indo-UK DTAA, it has been admitted ....
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....hour for a partner and GBP 90 per hour for an assistant. 5. The learned Commissioner (Appeals) erred in upholding the action of the Assessing Officer in considering the reimbursement of expenditure of Pounds Sterling 4,88,255.25 as part of income of the appellant and as liable to tax in India. 6. The learned Commissioner (Appeals) erred in confirming the disallowance of disbursements to the extent of 25% of the disbursement claim proportionate to the fee relating to services rendered in India as compared to the total fees. The Commissioner (Appeals) ought to have directed the Assessing Officer to allow deduction for the entire amount of the disbursements. 7. The learned Commissioner (Appeals) erred in dismissing the following ground in appeal as infructuous: "10. The learned Income-tax Officer erred in not allowing deduction for remuneration paid by the appellant to its employees for services performed outside India. 11. Income-tax Officer erred in stating that the appellant had not furnished details of the remuneration paid by the appellant for services performed outside India." 8. The learned Commissioner (Appeals) erred in upholding the action of the Assessing Off....
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.... of the case and in law, the Ld. CIT(A) was not justified in directing the AO to exclude the receipt from the Serum Institute of India Limited. The Ld. CIT(A) has not appreciate the 'force of attraction' principle in Article 7 of the Indo-UK DTAA. 5. With prejudice to the above, the Ld. CIT(A) should have denied benefit of the Indo-UK DTAA as the assessee is a partnership firm in the UK where it is not taxed. Hence it is not a resident of UK under the said DTAA. The entire income would be, thus, liable to taxation as per the Income-tax Act, 1961 alone". 30. The aforesaid grounds are again similar to ground raised by the Department in ITA No. 1712/Mum/2004 therefore, in view of our finding given therein, all the grounds raised by the revenue are treated as dismissed. 31. In the result, appeal of the revenue stands dismissed. ITA 1357/Mum/2004 : AY 2000-01 : Assessee's Appeal : 31. In the impugned appeal, the assessee has raised exactly similar grounds (as raised by the assessee in AYs 1998-99 & 1999- 2000) has been taken by the assessee, which for the sake of ready reference are reproduced hereunder :- "1. The learned Commissioner (Appeals) ought to have directed t....
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....licable to the partnership firm and not that applicable to an association of persons. 9. The learned Commissioner (Appeals) erred in not quashing the penalty proceedings under section 271(1)(c) of the Income-tax Act initiated by the learned Assessing Officer. 10. Learned Commissioner (Appeals) erred in not deciding the following grounds in the appeal: "8. The learned Income-tax Officer erred in holding that the appellant had not been able to produce all the invoices and that the bills did not contain any supporting. The appellant submits that all the invoices including those pertaining to reimbursement of expenditure were submitted vide letter dated February 6, 2003 and supporting in certain cases were submitted vide letter dated March 19,2003. 11. The learned Income-tax Officer erred in holding that some of the salary expenditure is covered by the deduction allowed under section 44C of the Income-tax Acct. 12. The learned Income-tax Officer erred in holding that the appellant was liable to tax in India under Article 15 of the Tax Treaty between India and the UK. The Income-tax Officer ought to have appreciated that Article 15 was applicable only to individuals and w....
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....ed in ITA No. 1713/Mum/2004, therefore, in view of our finding given therein, all the grounds raised by the revenue are treated as dismissed. 36. In the result, appeal of the revenue stands dismissed. ITA 2812/Mum/2005 : AY 2001-02 : Assessee's Appeal : 37. In the impugned appeal, the assessee has raised exactly similar grounds (as raised by the assessee in AYs 1998-99, 1999- 2000 & 2000-01) has been taken by the assessee, which for the sake of ready reference are reproduced hereunder :- "1. The learned Commissioner (Appeals) erred in holding that the appellant had a permanent establishment in India under Article 5(2)(k) of the Tax Treaty between India and U.K. The learned Commissioner (Appeals) ought to have appreciated that the appellant had no permanent establishment in India. 2. Without prejudice to the above, the learned Commissioner (Appeals) erred in not directing the Assessing Officer to accept the computation provided by the appellant in the Income and Expenditure Account as being the Income attributable to the permanent establishment. The learned Commissioner (Appeals) ought to have directed the Assessing Officer to adopt the gross income at GBP 3,99,373, dedu....
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....the bills did not contain any supporting. The appellant submits that all the invoices including these pertaining to the reimbursement of expenditure were submitted vide letter dated February 26, 2004 and supporting in certain cases were submitted on March 4, 2004. 12. The learned Income-tax Officer erred in not allowing deduction for remuneration paid by the appellant to its employees for services performed outside India. 13. The learned Income-tax Officer erred in holding that the appellant was liable to tax in India under Article 15 of the tax Treaty between India and the U.K. The Income-tax Officer ought to have appreciated that Article 15 was applicable only to individuals and was not applicable to the case of the appellant". 38. Since all the issues are exactly the same, therefore, the finding given in assessee's appeal (ITA No. 1355/Mum/2004 which is followed and applied by us to ITA No. 1356/Mum/2004 & ITA No.1357/Mum/2004) will apply mutatis mutandis in this year also and accordingly, the grounds in the appeal of the assessee are treated as partly allowed. 39. In the result, appeal of the assessee stands partly allowed. ITA 3596/Mum/2005 : AY 2001-02 : Revenu....