TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 180
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....e Act') ('Assessment order'), in pursuance of the directions issued by Dispute Resolution Panel-2 ('Hon'ble DRP'), New Delhi, on the following grounds: On the facts and circumstances of the case and in law, the Learned AO, based on the directions of the Hon'ble DRP, has: 1. The Learned AO/Hon'ble DRP erred in determining the total income of the Appellant to be Rs. 3,25,43,000 for AY 2012-13. 2. The Learned AO erred in not issuing a final assessment order under Section 144 of the Act; and thereby rendering the assessment order as null and void ab initio. 3. The Hon'ble DRP erred in noting that the Appellant did not furnish any relevant reply to show-cause why provisions of Article 17 of the India-Switzerland Tax Treaty ('DTAA') are not applicable to the facts of the Appellant's case. 4. The Learned AO/Hon'ble DRP erred in holding that the receipts of the Appellant are in the nature of receipts derived from personal activities of the athletes exercised in India and hence, taxable in India under Article 17 of the DTAA without considering the detailed submissions filed with Hon'ble DRP on non-applicability of Article 17 ....
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.... is participating regularly in the Formula One Event in India and is earning significant amounts of revenue from sponsors by way of granting them the rights to use their marks and symbols etc. It also receives revenue from the FOWC for participating in the event. All these payments/income are accruing from this business activity being carried out by the Assessee from its fixed place of business available to it in BIC, Greater Noida, Further, the event in India was held regularly from 2011 to 2013 on the basis of a prefixed schedule and itinerary proving regularity, continuity and repetitiveness of the business activity being carried out by the Assessee in India. The agreement between FOWC and JSIL is for five events which shows that the assessee was in the knowledge of period and repetition of Event from the beginning. All this discussion clearly establishes that all the necessary conditions required for Permanent Establishment (PE) under Article 5 of India-SWITZERLAND DTAA are satisfied in this case and the assessee has its Permanent Establishment (PE) in India as it undertakes regular, continuous and repetitive business activity at its fixed place of Business available to it at....
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.... correct particulars of its taxable income and furnished inaccurate particulars of its income within the meaning of section 271(1)(c) of the Income Tax Act, 1961." 5. Upon assessee's objection, Ld. DRP agreed that the assessee cannot be said to have a PE in India. It observed that the assessee has submitted that it did not have any agent or representative in India who was involved in negotiating and entering into contracts for and on behalf of assessee in India. Further, the contract between Formula One World Championship and JSIL is a contract between two independent parties and the assessee is not a party to the contract. The contracts entered into by GSA with Formula FB Business Ltd. and Felipe Massa were executed outside India and Formula One World Championship and JSIL were not party to this contract. Ld. DRP noted certain other submissions and agreed that since the Grand Prix was held for three days in a year, there is no element of permanence in presence of assessee in India. It also agreed that assessee is not a team participating in FIA Championship races but it is a sports management company that provides drivers to teams participating in FIA Championship. Ld. DRP fu....
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.... any PE in India. Therefore, finding of DRP supra that there exist no PE of the assessee in India shall not have any impact on taxability of receipts of the assessee in India because receipts are in nature of income derived from exercise of personal activities of racing drivers in India. During the course of proceeding before DRP, the panel afforded adequate opportunity to the assessee (0 show cause why provisions of Article 17 of DTAA are not applicable in present case. However, the assessee did not furnish any relevant reply. The AO is therefore directed to modify draft assessment order accordingly." 7. Thereafter, the DRP dealt with other aspects of the objections and held that the argument of the assessee that its receipts are not taxable in India as there is no PE in India, is not legally tenable. Thereafter, the DRP rejected other aspects of assessee's contention by holding as under:- "10.2 Regarding addition made by the AO with reference to payments made to the drivers, DRP has noted that despite repeated requests by the AO and also by DRP, the assessee has failed to furnish derail of various receipts from any source (resident or non-resident) in context of motor raci....
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.... he pleaded that since these decisions are not available when the AO passed the order, the issue should be remitted back to the file of AO to consider the issue afresh in the light of above AAR rulings. 11. Ld. DR for the Revenue, on the other hand, objected to the above proposition and supported the order of authorities below. 12. We have carefully considered the submissions of both the parties and gone through the record. As regards the decision of AAR referred to by the Ld. counsel for the assessee in the case of AAR No. 1430 of 2012, it will be gainful to refer to the concluding portion of the said ruling which reads as under:- "In the present case also no business operation was carried out by BBSE in India. It merely provided services of a non-resident driver who participated in Indian event. This act cannot constitute a business connection for the purpose of procuring the consideration received by BBSE under the tax net. As regards the taxability of the consideration under Section 9(1)(vii) of Income-tax Act, we do not see any reason to hold that the nature of consideration is either technical or managerial. The Department has not provided any cogent reason to substantiat....