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TaxTMI 
TaxTMI 
2020 (1) TMI 66
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....led its return of income on 28th November 2014, declaring nil income. The Assessing Officer in terms of section 144C(1) of the Act, proposed the draft assessment order and forwarded a copy of the same to the assessee. In the said draft assessment order, the Assessing Officer proposed to determine the income of the assessee at Rs. 71,94,76,823. After receiving the draft assessment order, the assessee raised objections before learned DRP, inter-alia, on the ground that the draft assessment order is invalid as the copy of the draft assessment order forwarded to the assessee has not been signed and stamped by the Assessing Officer. On the basis of the aforesaid objections raised by the assessee, learned DRP called for a factual report from the Assessing Officer. The Assessing Officer submitted a report on 29th March 2017, stating therein that the office copies of the draft assessment order kept on record are duly signed and stamped by the Assessing Officer. He further stated that the copy of the draft assessment order forwarded to the assessee was inadvertently left unsigned. After considering the report of the Assessing Officer, learned DRP observed that since the office copies of the....
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....h is of the view that the draft assessment order is invalid due to non signing, the matter may be restored to the Assessing Officer for passing a fresh draft assessment order. In support of his contention, the learned Departmental Representative relied upon the following decisions:- i) Deepak Agro Food v/s State of Rajasthan & Ors., Civil Appeal no.4327-28/2008, judgment dated 11.07.2008 (SC). ii) Home Finders Housing Ltd. v/s ITO, [2018] 93 taxmann.com 371 (Mad.); and iii) Home Finders Housing Ltd. v/s ITO,, [2018] 94 taxmann.com 84 (SC). 6. In rejoinder, the leaned Sr. Counsel for the assessee submitted, that once the draft assessment order is held to be invalid, it cannot be given a fresh lease of life by restoring it to the Assessing Officer to pass a fresh order. In support of such contention, the leaned Sr. Counsel relied upon the following decisions:- i) Fomento Resorts and Hospitals Ltd. v/s ACIT, ITA no.63/2007, judgment dated 30.08.2019 (Bom.); and ii) Fedex Express Transportation and Supply Chain Service (I) Pvt. Ltd. v/s DCIT, ITA no.857/Mum./2016, dated 11.07.2019. 7. We have considered rival submissions and perused th....
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....t order, neither the tax is computed nor is the demand notice issued. Only a copy of the draft assessment order is forwarded to the assessee for enabling him to raise objections before the DRP against any variation proposed to the income or loss which can be prejudicial to the assessee. Considered in the light of the aforesaid statutory provisions, the draft assessment order does not carry the force of a final assessment order which results in an enforceable demand against the assessee. Thus, in strict sense of the term, the draft assessment order cannot be treated as assessment order passed under section 143(3) r/w section 144C(3) or section 144C(13) of the Act. Therefore, the non-signing of the draft assessment order forwarded to the assessee would not invalidate the final assessment order passed under section 143(3) r/w section 144C(13) of the Act. In any case of the matter, the report of the Assessing Officer furnished before learned DRP clearly states that the office copies of the draft assessment order has been duly stamped and signed. Therefore, non- signing of the draft assessment order forwarded to the assessee would not be that fatal to invalidate the final assessment ord....
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....f royalty or fee for technical services as per Article-13 of the India UK Tax Treaty, it is not taxable in India. The Assessing Officer, however, did not find merit in the submissions of the assessee. The Assessing Officer observed, while considering identical issue in its own case in earlier assessment year, the Tribunal has held that the subscription fee received by the assessee is in the nature of royalty, hence, taxable in India. Following the decision of the Tribunal in assessee's own case, the Assessing Officer ultimately held that the subscription/revenue received by the assessee being in the nature of royalty is taxable in India and accordingly brought it to tax. Of course, while doing so, the Assessing Officer also held that the assessee has a PE in India. Be that as it may, against the aforesaid decision of the Assessing Officer, the assessee has raised objections before learned DRP. 10. Learned DRP, after considering the objections of the assessee, noticed that while deciding identical issue in assessee's own case for the assessment year 2013-14, it has followed the decision of the Tribunal in assessee's own case for the assessment years 2008-09 and 2009-10, wherein i....
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....d is not in the nature of royalty or even the alternative claim that only the royalty income attributable to the PE is taxable in India, cannot be accepted as the issue is squarely covered by the earlier decisions of the Tribunal. 14. We have considered rival submissions and perused the material on record. The first issue which arises is regarding the nature of subscription charges received by the assessee from the customers in India. While it is the claim of the assessee that it is not in the nature of royalty/fee for technical services and only a business profit, however, the Revenue has treated it as royalty. As could be seen from the facts on record, while deciding the dispute relating to nature of subscription charges received by the assessee in assessee's own case for the assessment years 2008-09 and 2009-10, the Tribunal in the decision reported in [2014] 47 taxmann.com 10 (Mum.) (Trib.), has held that the amount received by the assessee is in the nature of royalty as per Article-13(3) of the Tax Treaty. The same view was reiterated by the Tribunal wile deciding identical issue in assessee's own case for the assessment year 2012-13 in DCIT v/s Reuters Transaction Services....
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.... that the assessee has not taken any ground challenging the findings of the AO on existence of PE, then the AO ought to have computed the income under Article 13(6), but the AO has determined the income in accordance with the provisions of Section 115A of the Act which is incorrect. The learned A.R., in response to a query from the Bench that is there any change in the facts during the current year when compared to the facts already considered by the Tribunal in the earlier years, fairly accepted that there is no change in the facts, but still reiterated his argument that once the assessee has not challenged existence of PE income shall be computed in accordance with the provisions of Article 13(6) of India-UK treaty and not under the provisions of the Income Tax Act." 16. However, even after taking note of the aforesaid submissions of the assessee, the Tribunal was not persuaded to accept it as it found that the decision rendered earlier in assessment years 2008-09 and 2009-10 are on identical facts and there is no difference in the factual position in the impugned assessment year. The same is the factual position in the impugned assessment year as well. The argument advanced b....
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....executed in accordance with the Reuters Business Principles reduced in writing being part and parcel of the RTS agreement. The RIPL in turn also entered into Reuters Service Contract with the Indian clients for providing the necessary equipments, connection facility, installation and support service in order to avail the foreign exchange deal matching system provided by the assessee. Thus the Indian clients could avail the services of the assessee only through the equipments and connectivity provided by the assessee itself through its Indian subsidiary namely RIPL. The fee for providing the services is charged by the assessee from the Indian subscribers and actual uses of telecommunication are paid to the RIPL. The assessee is remunerating the RIPL for the services of marketing and installation of the equipment on behalf of the assessee to its clients. Thus though the equipments and other installation and connectivity are installed and provided through RIPL but the charges for the entire services and facility are paid by the clients to the assessee and not to the RIPL. The Ld. Counsel has also submitted that it is an integrated service rendered to the clients from its server situat....
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....rported use has taken place in India as both the assessee and the broadcaster/T.V. channels are situated outside India. In the said case the payment by the broadcaster/T.V. Channels were paid for using the transponder capacity of satellite and not for using any information or data to be provided to Indian customers. In the case in hand the assessee is rendering the services of providing foreign exchange deal matching system. This system facilitates the Indian subscribers i.e. Banks to deal in the foreign exchange with the other counterparts who are ready for the transaction of purchase and sale of foreign currency. Thus the role of the deal matching system is to provide a platform where both purchaser and seller find the respective match for the intended transaction of purchase and sale. Therefore, the decision of Hon'ble Delhi High Court in the case of Asia Satellite Telecommunications Co. Ltd (supra), is not applicable in the facts of the case and particularly when the said decision is based on the finding that the transponder capacity has only a media for uplinking and downlinking of signals of the broadcaster and TV operators to be transmitted to their customers without any man....
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....fic. 4. For the purpose of paragraph 2 of this Article, and subject to paragraph 5, of this Article, the term "fees for technical services" means payment of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which: (a) are ancilliary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received; or (b) are ancially and subsidiary to the application or enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received; or (c) make available technical knowledge, experience, skill knowhow or processes, or consist of the development and transfer of a technical plan or technical design." 13. The payment received by the assessee against the services rendered to the Indian Banks whether falls under the term royalty or fee for technical services has to be decided by considering the definition as provided under the treaty and the real nature of the service provided in terms of the various contract....
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....y successor agreement)." 16. As per the Reuters license principles interactive features of the system includes messaging, chatroom, bulletin board or those that allow interactivity between the users. Hardware / software and related documentation supplied by the assessee's group concern also includes the assessee's Application Programming Interface (API). All the services are rendered by the assessee on the site /office of the subscriber as per the clause 2.1 and 2.1.1 of the business principles as under: 2.1 Usage rights for information We classify services containing information into families sharing common business terms, as follows 2.1.1 Individual Services (listed here) Individual services are user-based Services priced, postitioned and packaged for users. For as long as they take the relevant service, users can: a) View, manipulate and create Derived Data fron information for their individual use: b) Store information, Manipulated Information and/or Derived Data for their individual use; c) Distribute and Redistribute limited extracts of information, Manipulated information and/or Derived Data to anyone, p....
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....eign exchange by matching the demand and supply. The platform of transacting the purchase and sale is commercial equipment allowed to be used by clients/ subscribers for commercial purposes. The payments made by Indian clients/subscribers to the Assessee for use and right to use of such equipment and information for processing their request of purchase and sale of foreign exchange constitute royalty. 17.1 The nature of service rendered by the assessee includes the information concerning commercial use by the subscriber. Further the entire system of the assessee including the equipments and connectivity facility is provided at the site of the subscriber. Therefore, the assessee is providing the service in the form of information and solution to the need of the subscribers by providing the matching party. The entire system along with the matching system and connectivity involves processing of subscriber's business queries and orders and finding out the matching reply in the shape of counterpart demand or supply for execution of the transaction of purchase and sale of foreign exchange. This sytem of the assessee is available only to the subscribers who have been given the acc....
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.... to decide the same. Further, though the assessee has not raised any specific ground on the issue of PE, however, the Ld. Counsel for the assessee has submitted that even if the Indian subsidiary of the assessee constitute PE or otherwise the assessee has PE in India in that case para 6 of Article 13 of DTAA will apply and the royalty or fee for technical services is assessed to tax in terms of provisions of Article -7 or Article -15 of DTAA. We do not agree with the contention of the ld. Counsel for the Assessee because once the receipt in question has been decided as royalty in nature then there is no need to go into the question of assessee having PE in India. Para 6 of Article-13 can be pressed into service only in the case when the existence of PE of a non resident is not in dispute. In the case in hand the assessee has not come up with the claim that the services rendered to the Indian Banks are through its PE. Rather the assessee has vehemently contended that it has no PE in India. In these facts and circumstances, the provision of para 6 of Article -13 canot be invoked in case when the receipt is found as royalty in terms of Article - 13(3) of the DTAA and assessee has not ....