Royalty taxation: notional royalty disallowed without contractual right; no PE attribution, royalties taxed at treaty rate.

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....Royalty receipts from revenue transfers cannot be taxed as notional royalty absent a contractual right to receive royalties; where the subsidiary offered receipts to tax and intercompany agreements were amended to allocate a specified paid percentage, treating additional notional royalty would cause double taxation and was deleted. The subsidiary was not a Permanent Establishment of the non-resident under fixed-place, service, equipment or agency PE tests, so attribution of business profits to a PE did not arise and prior arbitrary apportionments were set aside. Interest for shortfall advance tax is to be recomputed by the assessing officer applying the Mitsubishi ratio. Royalties attract the DTAA 15% treaty rate without additional health/education cess.....