TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 2095
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....led to note that, by the use of word "likewise" in Article 5 (3), the definition of a "Permanent Establishment" therein would bring within its ambit matters in addition to those covered by Clauses (1) & (2) of Article 5, and would not override Clauses (1) & (2) of Article 5; the Bombay office of the assessee is its Permanent Establishment; as such, one percent of the total receipts of the assessee, arising outside India, must be held attributable to the Bombay Office (which is its Permanent Establishment); and the conclusion of the Tribunal, to the contrary, gives rise to a substantial question of law. The other contention put forth by Sri H.M. Bhatia, learned Senior Standing Counsel, for the first time during the course of hearing of this appeal, is that, while computing the assessee's presumptive income under Section 44BB of the Income Tax Act, the assessing authority had erred in deducting the amounts paid by them to their sub-contractors, and in computing presumptive tax under Section 44BB only on the net receipts (gross receipts less the amount paid by the assessee to its sub-contractors). While fairly stating that this contention was not urged at any stage before the heari....
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....tax vs. Scindia Steam Navigation Co. Ltd: AIR 1961 SC 1633 and the Karnataka High Court in Principal Commissioner of Income Tax, Banglore vs. Softbrands India (P.) Ltd: (2018) 94 taxmann.com 426 (Karnataka), in this regard. On the question, whether the assessee was liable to be subjected to tax on income arising outside India on the ground that the Bombay office of the assessee is its Permanent Establishment, it is necessary to note that the Commissioner of Income Tax (Appeals) had, in his appellate order dated 29.11.2006, held that the Assessing Officer had, in his assessment order, held that the Mumbai office of the assessee was its Permanent Establishment; on the issue whether the office of the assessee at Mumbai is a Permanent Establishment under Article 5 (3), the duration of the respective projects must be looked at for determining the existence, or otherwise, of a Permanent Establishment; the ITAT had categorically held, in the assessee's own case for the assessment years 1986-1987, 1987-1988 and 1988-1989, that Article 5 (3) is a more specific provision, and would override Article 5 (2); the ITAT's findings on the issue of overriding effect of Article 5 (3), over the provis....
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....income of the assessee, a Non-resident Company; and (3) the order of CIT (A) be set-aside, and that of the Assessing Officer be restored. The findings of fact recorded by the Commissioner of Income Tax (Appeals), in his order dated 29.11.2006, to the effect that the Mumbai Office was not carrying on the business of the assessee, and was only a preparatory or auxiliary office which, having regard to Article 5 (4) (e) of the DTAA, could not be regarded as a Permanent Establishment in India, was not even put in issue by the Revenue, in the appeal filed by them before the Tribunal. Consequently, the Tribunal was not even called upon to examine whether, in view of Article 5 (4) (e) of the DTAA, the Bombay Office was required to be excluded from the ambit of a "Permanent Establishment" under clauses (1), (2) & (3) of Article 5 of the DTAA. As noted by the Commissioner of Income Tax (Appeals), in his order dated 29.11.2006, the Division Bench of this Court had dismissed the appeal preferred by the Revenue, against the order passed by the Income Tax Appellate Tribunal in the assessee's own case for the earlier assessment years 1986- 1987 to 1988-1989. In Commissioner of Income-tax....
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....cent. With the agreement of learned counsel for the parties, the Income-tax Appellate Tribunal has rightly held that a specific provision would override a general provision. All the issues in the appeal are concluded by a finding of fact. Thus, in our opinion, no substantial question of law arises to be answered in these appeals....." (emphasis supplied). The finding recorded by the Income Tax Appellate Tribunal in the orders passed in the aforesaid three years, was that Article 5 (3) is an exception to Articles 5 (1) & 5 (2), and would prevail notwithstanding Article 5 (1) & 5 (2), since the former was a specific provision. This conclusion of the Tribunal has not been negated by the Division Bench of this Court in the aforesaid judgment. While Sri H.M. Bhatia, learned Senior Standing Counsel for Income-tax, may be justified in his submission that the Division Bench has not, independently, analyzed the scope of Article 5 of the DTAAA, and has not recorded its opinion on the construction to be placed on various sub-Articles of Article 5 of the DTAA, the fact remains that the Division Bench has not interfered with the order of the Tribunal. The Commissioner of Incom....
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....e of business resulting from this combination is of a preparatory or auxiliary character. 5. Notwithstanding the provisions of paragraphs (1) and (2), where a person - other than an agent of an independent status to whom paragraph (6) applies - is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph (4) which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment by virtue of that paragraph. 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. 7. The fact that a company which is a resident of a Contracting ....
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....haracter, has not been subjected to challenge in appeal, before the Tribunal, by the Revenue, and the Tribunal was neither called upon nor did it express any opinion on the findings recorded by the Commissioner of Income Tax (Appeals), such findings of fact cannot be questioned in an appeal under Section 260A of the Income Tax Act, since, as held by the Division Bench of the Karnataka High Court in Principal Commissioner of Income Tax, Banglore vs. Softbrands India (P.) Ltd, it is only if the findings of fact recorded by the Tribunal are perverse would it give rise to a substantial question of law. As these findings of fact, recorded by the Commissioner of Income Tax (Appeals), were not even put in issue before the Tribunal, which is the final Court of fact, it would be wholly inappropriate for this Court to examine such findings of fact, recorded by the Commissioner of Income Tax (Appeals), for the first time in proceedings under Section 260A of the Income Tax Act. We see no reason, therefore, to interfere with the order of the Income Tax Appellate Tribunal to the extent it held that the income of the assessee, arising outside India, was not attributable to the Bombay office si....
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..... While the assessee had, no doubt, preferred an appeal to the Commission of Income Tax (Appeals), and had contended that Section 44BB of the Act itself was inapplicable, the question whether the deemed presumptive income under Section 44BB of the Act should be computed before or after deducting the amounts paid to sub-contractors etc. was not even in issue in the appeal preferred by the assessee to the Commissioner of Income Tax (Appeals). As noted hereinabove, the assessment order has not been subjected to revision under Section 263 of the Income Tax Act. As the appeal preferred by the Revenue to the Tribunal, is against the appellate order passed by the Commissioner of Income Tax (Appeals) it is evident that the Revenue has not put the aforesaid question in issue (nor could they have) in appeal before the Income Tax Appellate Tribunal. It is in this context that the judgment of the Supreme Court in Municipal Committee, Hoshiarpur vs. Punjab State Electricity Board & others, reliance on which is placed by Sri H.M. Bhatia, learned Senior Standing Counsel for Income tax, necessitates examination. In Municipal Committee, Hoshiarpur vs. Punjab State Electricity Board & others: ....
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....owers under Section 103 CPC. Thus, it is evident that Section 103 C.P.C. is not an exception to Section 100 C.P.C. nor is it meant to supplant it, rather it is to serve the same purpose. Even while pressing Section 103 C.P.C. in service, the High Court has to record a finding that it had to exercise such power, because it found that finding(s) of fact recorded by the court(s) below stood vitiated because of perversity. More so, such power can be exercised only in exceptional circumstances and with circumspection, where the core question involved in the case has not been decided by the court(s) below....." While examining the scope of Section 100 r/w Section 101 & 103 of the Civil Procedure Code, the Supreme Court, in Municipal Committee, Hoshiarpur, has held that the High Court could determine any issue which was necessary for disposal of the second appeal, provided the evidence on record was sufficient, in any of the following two situations: (1) when that issue has not been determined both by the trial court as well as the lower appellate court or by the lower appellate court; or (2) when both the trial court as well as the appellate court or the lower appellate court....
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....mine the scope of an appeal to the High Court under Section 260A of the Income Tax Act: "260A. Appeal to High Court.- (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Chief Commissioner or the Commissioner or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be- (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Chief Commissioner or Commissioner; (b) {***} (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (2A) The High Court may admit an appeal after the expiry of the period of one hundred and twenty days referred to in clause (a) of sub-section (2), if it is satisfied that there was sufficient cause for not filing the same within that period. (3) Where the High Court is satisfie....
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....Tax Act which makes the provisions of Section 100 & 103 CPC inapplicable to appeals under Section 260A of the Act. As noted hereinabove, in so far as the revenue is concerned, except in cases where the power of revision has been exercised under Section 263, the assessment order would attain finality. While the assessee has the remedy of preferring an appeal to the Commissioner of Income Tax (Appeals) under Section 246/246-A and, if they are still aggrieved by the order of the CIT (A), to prefer a further appeal to the Tribunal under Section 253 of the Act, the right of the Revenue to prefer an appeal to the Tribunal would arise only if it is aggrieved by any order passed by the Commissioner of Income Tax (Appeals), in an appeal preferred by the assessee, and not by the order passed by the Assessing Officer as the Income Tax Act does not provide for an appeal against such an order, and only provides for a revision under Section 263 of the Act. As power has not been exercised by the Principal Commissioner/ Commissioner, to revise the assessment order under Section 263 of the Act, the order passed by the Assessing Officer has attained finality in so far as the Revenue is concerned,....
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....nt case, where the Revenue has advanced such a contention before us, the question of law raised before the Division Bench, in M/S B.J. Services Company Middle East Limited vs. Assistant Commissioner of Income Tax (O.S.D.) Range-1, Dehradun, was by the assessee. The question raised therein was whether the interest received by the assessee, on the refund made to it by the Income Tax Department, should be included as part of the presumptive income of the assessee under Section 44 BB (2) of the Income Tax Act. In that case, the Assessing Officer had held that it was not liable to be included in the presumptive income under Section 44 BB of the Act, but was liable to be subjected to tax as income from other sources and, consequently, the assessee was required to pay tax at a far higher rate, than he would have if the income had been included in his total presumptive income under Section 44 BB of the Act. This issue, albeit in a different form, was raised both before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. It is no doubt true that the Division Bench had opined that such a contention was raised for the first time before it during the hearing of the ....