TaxTMI 
TaxTMI 
2018 (2) TMI 969
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.... 1961 ('the Act') has been finalized by the Assessing Officer for assessment year 2011-12 with regard to the nature and treatment of fee of Rs. 18,27,90,578/- earned by the assessee from Credit Securities (India) Private Limited (hereinafter referred to as Indian Company). 2. First we shall take up the appeal of the Revenue in ITA No.1247/Mum/2016. The Grounds of appeal raised by the Revenue read as under:- 1. "Whether On the facts and under the circumstances of the case and in law, the Ld. DRP is right in holding that the referral fees received by the assessee of Rs. 18,27,90,5787- from Credit Suisse Securities (India) Pvt. Limited does not constitute "Fees for Technical services". 2. Whether On the facts and under the....
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....ndian Company for bringing out issue of convertible bonds. The assessee contended that such referral fee received by CSDB was a 'business income' not liable to tax in India because CSDB did not have a 'permanent establishment' in India as recognised in Article 5 of the Indo-Swiss Double Taxation Avoidance Agreement (DTAA). The Assessing Officer however did not accept the stand of the assessee and instead held that the referral fee was liable to be taxed in India having regard to Section 5(2)(b) of the Act read with section 9(1)(i) of the Act. As per the Assessing Officer, since the referral fee was payable to CSDB in relation to the execution of transaction between Indian Company and referred client, such referral fee is deemed to accrue or....
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....able to be taxed in India as per Article 7 of the Indo-Swiss Double Taxation Avoidance Agreement (DTAA). In sum and substance as per the DRP, CSDB undertook the referral activity and it had no PE in India and so far as assessee's PE in India is concerned, such income could not be attributable to its activities in India. Accordingly, the Assessing Officer passed the final assessment order u/s.144C(13) r.w.s. 143(3) dated 11/01/2016 excluding the sum of Rs. 18,27,90,578/- from the total income, which is being agitated by the Revenue before us. 4. In this background, the learned DR has referred to the above stated Grounds of the appeal whereby, firstly, it is canvassed that the DRP was wrong in holding that the referral fee received from In....
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....rticle 7 of the Indo-Swiss Double Taxation Avoidance Agreement (DTAA). 7. We have carefully considered the rival submissions. As the aforesaid discussion shows, the short controversy before us relates to the nature and chargeability to tax of referral fee of Rs. 18,27,90,578/- received by assessee's Dubai Branch (CSDB) from the Indian Company. The charge of the Assessing Officer is that having regard to Section 5(2)(b) read with section 9(1)(i) of the Act, the said income is includible in the scope of total income chargeable to tax in India. To put it differently, as per the Assessing Officer, 'referral fee' is deemed to accrue or arise in India and therefore, the same is taxable in India. This has been inferred on the strength of the fa....
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.... stand of the Assessing Officer as to why the 'referral fee' is to be construed as 'fees for technical services' as understood for the purposes of the Act. As per the Assessing Officer, the 'referral fee' has been paid by the Indian Company after the execution of the work of the referred client. Merely because the fee was payable by the Indian Company to CSDB after execution of the work of the referred client is no ground to determine the nature of the payment. In this context, the Authority for Advance Rulings in the case of Cushman & Wakefield(S) Pte. Ltd., (supra) has dealt with a somewhat similar situation, wherein the applicant was a resident of Singapore, who had earned commission from an India based entity for having referred custome....
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....y credible assertions to the contrary has been brought out by the Revenue. Thus, considering that the referral activity was undertaken outside India and assessee's Mumbai branch (PE) had no role to play in the performance of the referral activity, the referral fee of Rs. 18,27,90,578/- earned by CSDB could not be construed to be attributable to assessee's PE in India and thus, the DRP rightly applied Article 7 of Indo- Swiss Double Taxation Avoidance Agreement (DTAA) and held the same to be non-taxable in India. The aforesaid conclusion of the DRP is hereby affirmed. Therefore, considering the short point on the basis of which the DRP has allowed the plea of the assessee, we dispose of the aforesaid appeal by affirming the ultimate directio....