VOLKSWAGEN FINANCE P.LTD, MUMBAI V. ITO (IT) 4(3)(2), MUMBAI

ITA 2195/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2451 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: L
• Assessment Year: 2015-2016
• Appeal Filed On: 29-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Depreciation; TDS
• Section: 5(2); 195; 201; 13; 23(1); 20

Judgement Text

ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 1 OF 17 IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI I BENCH, MUMBAI [CORAM : PRAMOD KUMAR VP AND AMARJIT SINGH JM ] ITA NO. 2195 / MUM / 201 7 ASSESSMENT YEAR : 201 5 - 16 VOLKSWAGEN FINANCE P VT L TD ... . .. ....... APPELLANT A WING, 3R FLOOR, SILVE R U TOPIA, C ARDI NAL GRACIOUS ROA D , CHAKALA, AND HERI EAST, MUMBAI 400 099 [PAN: ACCV9272G ] VS INCOME TAX OFFICER INTERNATI ONAL TAXATION WARD 4( 3)(2) , MUMBAI . ......RESPONDENT APPEARANCES BY NITESH JOSHI ALONG - WITH MANOJ DIXIT FOR THE APPELLANT AVAN ESSH TIWARI FOR THE R ESPONDENT DATES OF HEARING OF THE APP EAL : FEBRUARY 6 , 2020 DATE OF PRONOUNCING TH IS ORDER : MARCH 19 , 2020 O R D E R PER PRAMOD KUMAR, VP : [1] THIS APPEAL CHALLENGES CORRECTNESS OF THE ORDER DATED 8 TH FEBRUARY 2016, P ASSED BY T HE LEARNED COMMISSIONER (APPEALS ) IN THE MATTER OF TAX WITHHOLDING DEMANDS RAISED BY THE ASSESSING OFFICER UNDER SECTION 201 R.W.S. 195 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 201 5 - 16 . ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 2 OF 17 [2] WHILE THE ASSESSEE HAS RAISED A LARGE NUMBE R OF GROUNDS OF APPEAL , CORE ISSUE REQUIRING OUR A DJUDICATION I N THIS CASE IS WHETHER OR NOT THE ASSESSEE APPELLANT WAS REQUIRED TO WITHHOLD TAX FROM PART PAYMENT OF US $ 4,40,00 0 , IN RESPECT OF AN APPEARANCE MADE BY NI CHOLAS CAGE , A N OSCA R AWA RD WI NN ING C ELEBR ITY, FOR AN APPEARANCE MADE B Y HIM AT DUBAI (UAE) IN A PR ODUCT LAUNCH EVENT FOR PR OMOTING BUSINESS OF THE ASSESSEE IN INDIA. [3] T HE RELEVANT MATERIAL FACTS, IN THE LIG HT OF MATER IAL ON RECORD , A PPEAR TO BE LIKE THIS . THE ASSESSEE BEFORE US I S AN IND IA N COMPANY . TH E ASSESS EE HAD MADE A PAYMENT OF US $ 4,40,000, IN RESPECT OF A CELEBRITY APPEARANCE AT DUBAI, AND THE ASSESSEE DID NOT WITHHOLD ANY TAX FROM THE SAID REMITTANCE. THE ASSESSING OFFICER ( TDS) PRO BED THE MATTER IN SOME DETAIL. IT WAS F OUND THA T A N ENT ITY BY THE NAME OF AUDI IN DIA, A DI VISION OF VOLKSWAGE N GROUP SALES INDIA LT D, AND THE ASSESSEE JOINTLY PLANNED AN EVENT IN D UBAI FOR LAUNCH OF AUDIT A 8L FACELIFT MO DEL ( DUBAI AUDI A8L LAU NCH EVENT , IN SH ORT) . T HE PURPOSE O F THIS EVENT WA S LAUNC H OF A NEW MODEL OF AUDI CAR, I.E. AUDI A - 8 L , FOR T HE INDIAN MA RKET, BUT THE LAUNCH EVENT TOOK PLACE , ON 3 RD MA Y 2014 , AT THE PAVILION, ARMANI HOTEL, DUBAI. KIM PRODUCTIONS INC , A COMPA NY INCORPORATED IN THE USA , AGREED TO FACILITATE THE APP EARANCE OF NICH OLAS CA GE (HEREINAF TER REFERRED TO AS THE INTERN A TIONAL CELEBRITY ) FOR THREE CONSEC UTIVE HO URS , AND IT WA S A CONSIDERATION OF THIS APPEARANCE, THAT THE ASSESSEE P AID US $ 4,40,000, PLUS OTHER INCI DENTALS SUCH AS COSTS OF TWO RETURN FIRST CLASS AIR L INE T ICKETS FR OM LOS AN GELES , COSTS OF STAY AND LOCAL T RANSPORTATION IN DUBAI, AND COSTS OF HAIR AND MAKE UP OF THE CELEBRITY. AS A PART OF THIS APPEARANCE , THE CELEBRITY WAS TO BE DRIVE N INTO T HE VENUE AS PASSENGER I N THE NEW AUDI 8L AS A PART OF THE UN VEIL PROCES S, EN GAGE WITH THE AUDI IND IA DIRECTOR IN A SHO RT Q&A SESSION, JOIN THE A UDI INDIA DIRECTOR IN SOCIALIZING WITH THE GUESTS AT THE EVENT , INCLUDING MEET AND GREET PHOTOGRA PHS AND AUTO GRA PHS - AS REASONABLY REQUIRED, AND INTERACT WITH SELECT MEMBER S OF THE I N DIAN MEDIA. THE ASSESSEE AN D AUDI INDIA W ERE, AS A PART OF THIS ARRANGEMENT, HAD FULL RIGHTS TO USE FREE NON - EXCLUSIVE PROMOTIONAL (E. G , NOT IN CONNEC TION WITH PAID ADVERT ISING, INC LUDING, WITHOUT L IMITATION, IN TV COMMERCIALS, BILL BOARDS , AND PA ID ADV E R TISING ETC) USAGE OF ALL T HE EVENT FOOTAGE / MATERIAL / FIL MS/ STI LLS/ IN T ERVIEWS ETC OF THE A BOVE MENTIONED LA UNCH EVE NT CAP TURING CELEBRITY S PRESENCE ACROSS ALL PLATFORM FOR BELOW THE LINE PUBLI CITY ON INTERNET , IN PRESS RE LEASES, NEWS REPORTS, SOCI AL M E D IA, ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 3 OF 17 AUDI MAGAZINE E TC FOR A PERIOD OF 6 MONTHS FROM THE DATE OF LAUNCH EVE NT, AND FOR AN UNLIMI TED PERIOD OF TIME ONLY FOR INTERNAL USA GE WITH THE VOLKSWAGEN GROU P . IN AN UNDATED , THOUGH SI GNED, NOTE FILED DURING THE CO URSE OF HEARING, THE ASSE SSEE HAS E X PLAINED THE EVENT AS FOLLOWS: AUDI INDIA LAUNCHED THE 2014 A8L FACELIFT FOR EXCLUSIVE INDIAN CUSTOMERS FOR SPECIAL INVITE IN DUBAI. THE COMPANY HAD FLOWN ABOUT 150 PEOPLE MOSTLY PROSPECTIVE BUYERS AND SOME JOURNALISTS TO THE LAUNCH CEREMONY. AU DI A8L IS A LUXURY BRAND AND HOLDS A PRESTIGIOUS STATUS OR BRAND VALUE IN THE MARKET. HENCE THE LAUNCH WAS A LAVISH EVENT WHICH WAS HELD IN THE WORLD'S TALLEST BUILDING WITH VEGAS STYLE FOUNTAIN SHOWS, A WORLD CLASS ILLUSIONIST AND GUEST APPEARANCE BY A CE LEBRIT Y. TH E ENTIRE EVENT WAS DESIGNE D IN A MANNER TO GIVE A FEELING OF LUXURY AND EXCLUSIVENESS TO INDIAN CUSTOMERS. AUDI INDIA INVESTS SIGNIFICANTLY IN BRANDING THROUGH MARKETING INITIATIVES. IT WAS A MARKETING STRATEGY TO CALL CUSTOMERS/DEALERS FROM IND IA TO DUBAI FOR THIS EVENT AND ALSO T O CALL CELEBRITIES FOR THE EVENT. THIS MODEL IS IMPORTED FROM GERMANY AS A COMPLETELY BUILT UNIT WITH CUSTOMIZATION IN LINE WITH CUSTOMER'S REQUIREMENTS. IT TAKES AROUND 4 - 5 MONTHS FOR CARS TO BE SHIPPED FROM GERMANY TO INDI A. NE W MODEL OF AUDI A8 WAS AVA ILABLE IN DUBAI AND HENCE THE LAUNCH EVENT WAS PLANNED IN DUBAI FOR SHOWCASING TO POTENTIAL CUSTOMERS. MAJORITY OF THE CUSTOMERS WERE HNI INDIVIDUALS OR EXISTING CUSTOMERS ALREADY DRIVING A DIFFERENT VARIANT OF THE AUDI CAR. VOLKS W AGEN FINANCE PRIVATE LIM ITED (VWFPL) IS A CAPTIVE FINANCE COMPANY. AUDI INDIA AND VWFPL ARE PART OF THE SAME GROUP - VOLKSWAGEN GROUP. SUCH PROMOTIONAL EVENTS GENERATE ENQUIRES OF POTENTIAL CUSTOMERS WHO IN TURN WOULD LIKE TO PURCHASE AUDI CARS AND F INANC E THE SAME FROM VWFPL. IN ORDER TO SUPPORT MUTUAL BUSINESS VWFPL WAS PART OF THIS EVENT. THE AUDIO VISUAL CLIPS WERE AVAILABLE FOR USE EXCLUSIVELY FOR AUDI INDIA AND VWFPL. [4] HOWEVER, ON THE GROUND THAT THE EVENT TOOK PLACE IN D UBAI, UAE , AND THE C ELEB R I TY MADE HIS APPEARANCE AT THE EVENT IN DUBAI, IT WAS CLAIMED THAT THIS EVENT DID NOT RIS E TO ANY TAX IMPLICATIONS IN INDIA SO FAR AS THE EV ENT AND THE CELEBRITY APPEARANCE WAS CONCERNED. THE STAND OF THE ASSESSEE WAS THAT NO TA X WAS DE D UCTI BLE FROM T HIS P A YMENT AS THE CELEBRITY OR HIS AGENT WERE NO T CARRYING OUT ANY ACTI VITIES IN INDIA , IN RELATION TO THE AP PEARANCE FEES RECEIVED FROM TH E AS SESSEE, AND AS SU CH THE APPEARANCE FEE CO ULD NOT BE TREATED AS ACCRUING OR ARISING ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 4 OF 17 IN INDIA , OR DEEMED TO BE AC CRUI N G OR ARISING IN INDIA . IT WAS ALSO CLAIMED THAT AS THE INCOME WAS NOT TAXAB LE UNDER THE INCOME TA X ACT, 1961, THERE WAS N O OCCAS ION TO CLAIM ANY TREATY BENEFITS. THE ASSESSING OFFICE R, UNIM PRESSED WI TH THESE ARGUMENTS, PROCEEDED TO HOLD THAT TH E PAY M ENT M A DE TO THE CE LEBRITY WAS TAXABLE IN INDIA, MORE PARTICULARLY AS ROYALT Y UNDER SECTION 9(1)( VI) OF THE I NCOME TAX ACT, 1961. HE ALSO EXAMINED THE PROV ISIONS OF ARTICLE 12 OF THE INDIA USA DOUBLE TAXATION AVOIDANCE AGREEMENT [( 1991 ) 187 ITR (STAT) 102] ; IND O US TAX TREATY , IN SHORT) AND HELD THAT EVEN TH IS TAX TREATY PROVISIONS DO NOT COME TO THE RESCU E OF THE ASSES SEE EITHER . AGGRIEVED , ASS ES SE E CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) NOT ONL Y CONFI RM ED THE ACT I O N OF THE ASSESSING OFFICER BUT ALSO P ROCEE DED TO HOLD THAT THE WHOLE PURPOSE OF ORGANIZING AN INDIA CE NTR IC E VENT AT DUBAI WAS T O AVOID AT TRACTION OF CLAUSE REGARDING INCOME ACCRUING OR ARISING IN INDIA , AND RE FERRED TO THE PROVISIONS OF SECT ION 9(1)(I) . THE IMPUGNED TAX WITHHOLDI NG DEMAND UNDER SE CTIO N 201 R.W.S. 195 WAS THUS C ONFIRMED. THE ASSESSEE IS AGGRIEVED AND IS IN FURTHER APPEAL BEFORE US. [ 5 ] WE H AVE HEARD THE RIVAL CONTENTIONS, P ERUSED THE MATERIAL ON RECORD AND DUL Y CONSIDERED FAC T S OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSIT I ON. [ 6 ] SO FAR AS A NON - RESIDENT T A XPAYER IS CONCERNED, UNDER SECTION 5(2) , THERE A RE ONLY T WO SITUATION IN WHICH THE INCOME CAN BE TAXED IN INDIA - ( A) FIRST , WHEN THE INCOME IS RECEIVED OR IS DEEME D TO BE RECEIVED IN INDIA IN SUCH YEAR BY OR ON BEHALF OF S UCH P E RSON ; AND (B) SE COND, WHEN AN INCOME ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE TO HIM IN I NDIA DURING SUCH YEAR. IT IS NO T EVEN THE CASE OF THE ASSESSING OFFICER , NOR DOES IT EMERG E OUT OF THE MATERIAL ON RECORD, THAT THE INCO ME WAS RECEIV ED O R WAS DEEMED TO HAVE BEEN R EC EIVED BY THE CELEBRITY O R HIS AGENT IN INDIA . TH E CASE OF THE ASSESSING OFFICER THUS HINGES ON AP PLICATION OF SECTION 5(2)(B) , I.E. WHEN AN INCOME ACCRUE S OR ARISES IN INDIA OR IS DEEMED TO ACCRUE OR ARI SE IN INDIA. [7] SEC TION 5(2)(B) PROVIDES THAT S UBJECT TO THE PROVISIONS OF THIS ACT, THE TOTAL IN COME OF ANY PREVIOUS YEAR OF A NON - RESIDENT INCLUDES , INTER ALIA , ALL INCOME FROM WHATEVER SOURCE ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 5 OF 17 DERIVED WHICH ACCRUE S OR ARISES , OR IS D EEMED TO ACCRUE OR ARISE , TO HIM IN INDI A DURING SUCH YEAR. SO FAR AS FIR ST LIMB OF THIS STATUTOR Y PROVISION IS CONCERNED, IT SIMPLY REF E RS TO INCOME ACCRUING OR ARISING IN INDIA . IN OTHER WORDS , TO TRIGGER TAXATION UNDER FIRST LIM B OF SECT ION 5(2)(B), AS A PLAIN L OOK AT THE STATUTORY PROV ISIONS WOULD S HOW , THE EVENT RESULTING IN ACCRUAL OF INCOME MUST TAKE PLACE IN INDIA . THAT IS NOT THE SITUATION BEFORE US. WHAT RES ULTS IN AN IN COME A CCRUING OR ARISING TO THE INTERNATIONAL CELEBRITY IS PARTICIPATION IN THE DUBAI AUDI 8 L LAUNC H EVENT, AND THIS EVENT HAS TAKEN PLAC E O UT SIDE INDIA . IN STRICT LEGAL SENSE OF THE EXPRESSION ACCRUES OR ARISES, TH EREF ORE, THE INCOME TO THE CELEBRITY CANNOT THUS BE SAID TO HAVE ACCRUED OR ARISEN IN INDIA , BUT THEN, GIVEN THE B ROADER SCHEME OF THE I NCOME TAX ACT, EVEN FIRST LIMIT OF S ECTION 5(2 )(B) NEE DS TO BE READ WITH , INTER ALIA , SECTION 9(1)(I) OF THE ACT WHICH EX TENDS THE SCOPE OF INCOME ACCRUING OR ARIS ING IN INDIA BY INCLUDING , IN THE DEEMING FICTION, A LL INCOME ACCRUING OR ARISING, WHETHER DIRECTLY OR INDI RECTLY, THROUGH OR FROM ANY BUSINESS CONNECTION IN INDIA, OR THROUGH OR FROM ANY PROPERT Y IN INDIA, OR THR OUGH OR FROM ANY ASSET OR SOURCE OF INCOM E IN INDIA, OR THROUGH THE TRANSFER OF A CAPITAL ASSET SITUATE IN INDIA . WHAT ESSENTIALLY FOLLOWS IS THAT A N I NCOME W H ICH, DI R ECTLY OR INDI RECTLY, A CCRUES OR ARISES TO A NON - RES IDENT, THOUGH O R FROM ANY BUSINESS CONNECTION IN INDIA, IS ALSO CHARGE ABLE TO TAX IN INDIA . EXPLAINING THE CONNOTATIONS OF EXPRES SI ON THROUGH APPEARING BEFORE THE WORDS OR FROM ANY BU SINESS CONNECTION IN INDIA , EXPLANATI ON 3 TO SECTION 9(1)(I) CLARIFIES THAT THE EXPRESSION THROUGH SHALL MEAN AND INCLUDE AND SHALL BE DEEMED TO HAVE ALWAYS MEANT AND INCLUDED BY MEANS OF , I N CO NSEQUENCE OF OR BY REASON OF . T O PUT I T IN SIMPLE W OR DS, WHEN AN INCOME ACCRUES OR ARISES TO A NON - RESIDENT OUTSIDE INDIA BUT BY MEANS OF, IN CONSEQUENCE O F, OR BY REASON OF, ANY BUSINESS CONNECTION IN INDIA, IT WILL ALSO BE TAX ABLE IN IN DIA U NDER SE CT ION 5(2) . [ 8 ] AS TO WHAT CONSTITU TES BUSINESS CONNECTI ON , IT HAS NOT BEEN DEFINED UNDER THE INCOME TAX A C T, 1961 , AND, RIGHT LY SO, BECAUSE AS KAN GA AND PALK H IVALA, IN THEIR OFT QU OTED AND WELL REVE RED WO RK THE LAW AND PRACTI CE OF INCOME TAX ( 7 TH EDITI ON ; PUBLISHED IN 1976 ) ALS O PUT IT AT PAGE 200 , THE CA TEGORIES OF BUSINESS CONNECTION ARE INCAPA BLE O F EXH AUSTIVE ENUMERATION . T HE DEFINITION OF BUSINESS CONNECTION , AS SET OUT IN EXPLANATION 2 T O SECTION 9(1)(I) INTRODUCED BY THE FINANCE ACT 2003 , IS ALSO ONL Y AN INCLUSIVE , AND NOT ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 6 OF 17 EXHAUSTIVE, DEFINITION. W HATEVER ARE THE INSTANCES OF BUSINESS CONNEC TION SET OUT IN THE AVAILABLE LI TERATURE, ARE ADMITTEDLY ONLY I LLUSTRATI VE IN NATURE . [9] IN THE LANDM ARK CASE OF CIT VS R D AG GARWAL & CO [(19 65) 56 IT R 20 (SC)] , HON BLE SUPRE ME COURT HAD AN OCCAS ION TO DEAL WITH A SITUATION IN WHICH AN INDIAN ASSESSEE WAS REPRESENTING , AS A COMMISSIO N AGENT, TWO ENTITIES , BASED IN BELGIUM AND ITALY RESPECTIVELY, AND, BA SED O N THIS ASSOCIATION, THE ASSESSING OFFICER PRO CEEDED T O BRING TO TAX INCOME , COMPUTED @5% O N EX PORTS TO INDI A, OF THESE TWO FOREIGN ENTITIES AS, IN HIS VIEW, TH ERE SUBSISTED BUSINESS CONNECTION BET WEEN TH E NON - RESIDENT EXPORTERS AND THE ASSESSEE . IT WAS IN THIS CONTE XT THAT HON B LE SUPREME COURT OBS ERVED THAT THAT THE INCOME T AX ACT CONTAINS NO DEFINITION OF THE EXPRESSION BUSINESS C O NNECTION AND ITS PR ECISE CONNO TATION IS VAGUE AND INDEFINITE AND THAT THE EXPRESSION BUSINESS CONNECT ION UNDOUBT EDLY MEANS SOMETHING MORE THAN BUSINESS THEIR LOR D SHIPS THEN MADE CERTAIN O BSERVATIONS IN THE CONTEXT WHAT A BU SINESS CONNEC TION I NVOLVES IN CERTAIN SITUA TIONS, BUT THEN WE ARE NOT REALLY CONCERNED ABOUT THESE OBSERV ATIONS AS THESE OBSERVAT IONS WERE MADE IN THE RESPECT OF BUSINESS CARRIED ON B Y THE NON - R ESIDENT . THEIR LO RDS HIPS D ID SPECIFICALLY OBSE RVE THAT IMPORT ANT CASES WHICH HAVE ARISE N BEFORE TH E COURTS MAY BRIEFLY BE REVIEWED, NOT FOR EVOLVING A DEFINITION APPLIC ABLE GENERALLY TO ALL CASES BUT WITH A VIEW TO ILLUSTRATE WHAT RELA TIONS BETWEEN THE NO N - RESIDENT AND ACTI VITY IN THE TAXABLE TERRITORIES WHICH CONTR IBUTED TO THE EARNINGS OF THE INCOME MAY OR MAY NOT BE REGARDED AS BUSINESS CONNECTIONS . WHEN SUCH ARE THE V IEWS OF H ON BLE SUPREME COURT , IT I S BEYOND ANY DISPUTE OR CONTROVERSY THAT THE ELE ME NTS OF BUSINESS CONNECTION , AS RECOGNIZED IN T HIS CASE OR, FOR THAT PUR POSE, IN THE SIMILAR JUDICIAL PRE CEDENTS, CANNOT FETTER WHAT COULD BE CONSIDERED TO BE A B USINESS CONNECTI ON . ELSEWHERE IN THIS VER Y JU DGMENT , HON BLE S UPREME COU RT HAS OBSER VED THAT A RELATION, TO BE A BUSINES S CONNECTION , MUST BE REAL AND INT IMATE, AND THROUGH OR FROM WHICH INCOME MUST ACCRUE OR ARISE, WHETHER DIRECTLY OR INDIRECTLY, TO THE NON - RESIDENT . WHAT C OULD , THEREFORE, BE A BUSINESS CONNECTION IS NOT ONLY A TANGIBLE THING LIKE P EOPLE OR BUSINESS ES, BUT, AS APTLY PUT B Y HON BLE SUPREM E C OURT, A RELATION SHIP TOO , AS LONG AS SUCH A RELATION SHIP , REAL OR IN TIMATE, RESULTS , DIRECTLY OR INDIRECTLY, AN INCOME ACCRUING OR ARISING TO THE NON - RESIDENT. EXPLANATION 3 TO SECTION 9 (1 )( I) FURTHER MAKES IT CLEAR THAT ANY INCOME ACCRUING OR ARISING THROUGH A BUSINESS CONNECTION WILL INCLUDE AN INCOME ACC RUING OR ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 7 OF 17 ARISING BY MEANS OF , I N CONSEQUENCE OF OR BY REASON OF A BU SINESS C ONNECTION IN INDIA. IN OTHE R WO R DS, THEREFORE, WHEN A N INCOME ACCRU ES OR ARISES TO A NON - RESI DENT OUTSIDE INDIA, BU T BY THE REASON OF ANY BUSINESS CO NNECTION IN INDIA OR IN CONSEQUENCE OF ANY BUSINESS CONNECTION IN INDIA, SUCH AN INCOME SHALL ALSO BE TAXABLE IN INDIA UN DER SECTION 5(2)(B). [10] TH IS TAKES US TO THE QUESTI ON WHETHER THE INCOME ACCRUING TO THE INTERNATIONAL CELEBRITY , ON ACCOUNT OF PARTICIPATION IN AUDI A 8L LAUNCH EVENT HOSTED IN DUBAI , HAS ACCRUED O R ARISEN, WH ETHER DIRECTLY OR INDIRECTLY, THRO UGH OR FROM A NY BUSINESS CONNECTION IN INDIA - P ARTICULARLY WHEN THIS EVENT IS SPECIFICALLY TAR GETED FOR IN DIA BASED CUSTOMERS OF A GROUP OF INDIAN ENTIT IES - NAMEL Y AUD I INDIA AND ITS FINANCING AFFILIATE I.E. THE ASSESSEE BEFORE US , IS ADMITTEDLY FOR BELOW THE LINE PUBLICITY ON INTERNET, IN PRESS RELE ASES, NEWS REPORTS, SOCIAL MEDIA FOR THE BENEF IT OF THESE ENTITIES , AND THE COSTS OF THE EVENT IS BORNE BY THESE ENTIT IES AS EXPENDITURE IN FURTHERANCE OF THEIR BUSINESS INTERESTS IN INDIA . [11] IT IS AN AGREED POSITION THA T THE AUDI A8L FACELIFT LAUNC H EVENT WAS INDIA - CENTRIC AND THE ENTIRE EXPENSE S OF THE L A U N C H E V E NT WERE TREATED AS EXPENSES OF INDIAN ENTITIES, N AMELY THIS ASSESSEE AND AUDI INDIA. THE EVENT HAS PHYSICALLY TAKEN PLACE IN DUBAI, UAE, BUT, BEYOND ANY DISPUTE OR CONTROVERSY, THE BENEFITS OF THIS EVENT WERE TO ACCRUE TO THE ASSESSEE AN D AUDI INDIA. GOING EVEN BY THE INFORMATION FURNISHED BY THE ASSESSE E, THE COMPANY HAD FLOWN 150 PERSONS, MOSTLY PROSPECTIVE BUYERS AND SOME JOURNALISTS, TO DUBAI. WHETHER THESE PERSONS INCLUDED PROSPECTIVE B UYERS OR NOT, THESE PERSONS DID NOT INCLUDE INDI AN SOCIALITES AND PAGE THREE PERSONALITIES, WHOSE ASSOCIATION WITH T HE EVENT HAD THE SIGNIFICANT POTENTIAL OF HAVING SUBLIMINAL INFLUENCE ON THE PROSPECTIVE BUYERS OF THIS CAR IN INDIA. OBVIOUSLY, THE COST OF EVENT WAS SO HIGH, ADMITTEDLY RUNNING INTO TENS OF CRORES OF RUPEES, THAT THIS EXPENSE COULD NOT HAVE BEEN JUSTIFIE D FOR INFLUENCING CAR PURCHASING DECISIONS OF THESE LESS THAN 150 PERSONS. TO PUT A QUESTION TO OURSELVES, WHAT WERE THE BENEFITS OF THIS EV ENT, HELD IN DUBAI, TO THE INDIAN ASSESSES. IN O UR HUMBLE UNDERSTANDING, AND AS THE MOU WITH CELEBRITYS AGENT UNAMB IGUOUSLY INDICATES IN SO MANY WORDS - AS NOTED EARLIER IN THIS ORDER, THE PREDOMINANT BENEFIT OF THIS EVENT WAS BELOW THE LINE PUBLICITY ON INTERNET, IN PRESS RELEASES, NEWS REPORTS, ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 8 OF 17 SOCIA L MEDIA FOR AUDI 8L FACELIFT IN INDIA. THE TARGET AUDIENCE WAS IN I NDIA, THE POTENTIAL CUSTOMERS WERE IN INDIA, THE INTENDED BENEFITS WERE IN INDIA, AND YET THE EVENT WAS IN DUBAI UAE. THE QUESTION THEN ARIS ES WHETHER THE INCOME ON ACCOUNT OF THIS LAUNCH EVENT IN DUBAI CAN BE SAID TO ACCRUE OR ARISE IN INDIA. LET US NOT F ORGET THE FACT THAT THE CELEBRITY WAS TO MAKE AN APPEARANCE IN UAE EVENT BUT ADMITTEDLY THE EVENT WAS FOR BELOW THE LINE PUBLICITY IN INDIA. THE EXPRESSION BELOW THE LINE PUBLICITY HAS B EEN VARIOUSLY DESCRIBED AS TARGETING A SPECIFIC GROUP OF POTENTIAL CONSUMERS, HIGHLY TARGETED, WITH ADVERTISEMENTS BEING CREATED KEEPING IN MIND THE DEMOGRAPHIC AND PSYCHOGRAPHIC CHARACTERISTICS OF PARTIC ULAR CUSTOMER SEGMENT, AND AN ADVERTISING STRA TEGY WHERE PRODUCTS ARE PROMOTED IN MEDIA OTHER THAN MAINSTREAM RADI O, TELEVISION, BILLBOARDS, PRINT, AND FILM FORMATS. THESE ACTIVITIES ARE NOT IN VACUUM. THESE ACTIVITIES HAVE, AS THEIR TARGETS, INDIAN CUS TOMERS - AND CERTAINLY SOME MORE CUSTOMERS THAN T HE POTENTIAL CUSTOMERS IF AT ALL INCLUDED IN THE CONTINGENT OF 150 P ERSONS FLOWN TO DUBAI FOR BEING PRESENT AT THE LAUNCH EVENT. OF COURSE, THE SCHEME OF THIS BELOW THE LINE PUBLICITY EVENT SEEMS TO BE THAT E VEN THE INDIAN SOCIALITES AND GUESTS, DIRECTLY O R INDIRECTLY, ENDED UP BEING THE INSTRUMENTS OF INFLUENCING THE POTE NTIAL CUSTOMER BEHAVIOUR - RATHER THAN BEING POTENTIAL CUSTOMERS IN THEIR OWN RIGHT. IT WAS THUS A UNIQUE SITUATION IN THE SENSE THAT WHILE T HE EVENT, IN WHICH APPEARANCE WAS MADE BY THE CE LEBRITY, WAS HELD OUTSIDE INDIA, ALL THE BENEFITS ACCRUED TO THE ASS ESSEE IN INDIA , AND IT WAS ON ACCOUNT OF THESE BENEFITS TO THE ASSESSEE THAT THE INTERNATIONAL CELEBRITY WAS PAID FOR HIS PARTIC IPATION IN T HE DUBAI AUDI 8 L FACELIFT EVENT . THE IN COME TH U S C LEA RED ACC RUE AND ARIS ES, ON THE F ACTS OF THIS CASE, BY THE REASON OF BUSINESS CONNECTION IN INDIA. WE FIND, AS THE ASSESSEE HAS ADMITTED IN SO MANY WORDS IN THE WRITTEN NOTE, THAT THE E VENT IN DUBAI WAS INDIA CENTRIC, THAT THE EVENT WAS FOR THE PURPOS E OF PROMOTING BUSINESS IN INDIA, THAT SUCH PROMOTIONAL EVENTS GENERATE ENQUIRES OF POTENTIAL CUSTOMERS IN INDIA WHO IN TURN WOULD LIKE TO PURCHASE AUDI CARS IN INDIA AND FINANCE THE SAME FR OM THE ASSESSEE CO MPANY, AND THAT IT WAS FOR THIS REASON THAT THE ASSESSEE COMPANY WAS A PART OF THIS EVENT. IT IS ALSO AN ADMITTED POSITION THAT THE AUDIO - VISUAL CLIPS WERE AVAILABLE FOR USE EXCLUSIVELY FOR AUDI INDIA AND VWFPL. WHEN THESE AUDIO - VISUAL CLIPS WERE FOR EX CLUSIVE USE OF THE ASSESSEE AND THE AUDI INDIA, AND BOTH OF THESE ENTITIES HAVE OPERATIONS ONLY IN INDIA, THE USE OF THIS EVENT, AS A TOOL OF MARKETING, WAS ONLY IN INDIA. WE HAVE ALSO NOTED THAT IN THE TERMS OF MOU SIGNED BETWEEN THE ASS ESSEE AND CELEBRIT YS AGENT, PREDOMINANT BENEFIT TO THE ASSESSEE W AS USAGE OF ALL THE EVENT FOOTAGE/ MATERIAL/ FILMS/ STILLS/ INTERVIEWS ETC OF THE ABOVE MENTIONED LAUNCH EVENT CAPTURING CELEBRITYS PRESENCE ACROSS ALL ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 9 OF 17 PLATFORM FOR BELOW THE LINE PUBLICIT Y ON INTERNET, IN PRESS RELEASES, NEWS REPORTS, SOCIAL MEDIA, AUDI MAGAZINE ETC. THERE IS ALSO NO DISPUTE ABOUT THE POSITION THAT ALL EXPENSES ARE BORNE BY THE ASSESSEE, AND ITS ASSOCIATE AUDI INDIA, AND CLAIMED AS A DEDUCTION UNDER SECTION 37(1), WHICH E SSENTIALLY IMPLIES THAT THE EXPENSES, EVEN BY ASSESSEES ADMISSION , HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE AND THE BUSINESS OF THE ASSESSEE IS ONLY IN INDIA. VI EWED THUS, W HEN WE EXAMINE RELATION BETWEEN INDIAN BUSINESS AND P ARTICIPATION IN AN EVENT BY THE CELEBRITY AT DUB AI LAUNCH EVENT , WE HAVE NO DOUB T THAT IT IS BEC AUSE OF THIS RELATIONSHIP BETWEEN EVENT IN DUBAI AND BUS INESS OF THE ASSESSEE IN INDIA THAT THE INCOME HAS ACCRUED AND ARISEN TO THE CE LEBRITY MAKING APPEARANCE IN DUBAI LAUNCH EVENT. THERE CANNOT BE ANY JUST IFICATION FOR AN ASSESSEE IN INDIA , DOING BUSINESS ONLY IN INDIA, PAY ING MONEY T O A CELEBRITY TO MAKE AN APPEARANCE IN AN E VENT IN DUBAI UNLESS SUCH AN APP EARANCE BENEFITS THE BUSINESS OF THE ASSESSEE IN INDI A, AND THE FACT THAT IT DID BENEFIT THE BUSINESS INTERESTS OF THE ASSESSEE IN INDIA IS NOT EVEN IN DO UBT OR CONTROV ERSY. AS A MATTER OF FACT, THERE IS A N INHERENT DICHOTOMY IN THE APPROACH OF THE ASSESSEE INASM UCH AS, ON ONE HAND, HE CLAIMS THE EXPENSES IN THE DUBAI LAUNCH EVE NT AS EXPENSES INCURRED FOR THE P URPOSES OF BUSINESS IN INDIA, WHICH IS THE ONLY GEOGRAPHICAL LOCA TION WHERE THE ASSESSEE DOES BUSI NESS, AND YET HE CLAIMS THAT THE DUBAI LAUNCH EVENT DOES NO T HAVE BUSI NESS CONNECTION IN INDIA. ONC E THE EXP ENSES FOR HOLDING THIS EVENT IS IN CONNECTIO N WITH BUSINESS IN INDIA, IT IS ONLY A NATURAL COROLLARY THERETO THAT INCOME FROM PARTICI PATION , IN THIS EVENT, T O A NON - RESIDENT HAS A B USINESS CONNE CTION IN INDIA. AS WE HOLD SO, WE NEED NOT INFLUENCED BY T HE OBSERVATIONS IN AVAILABLE JUDICIAL PRECEDENTS ON WHAT CONSTITUTES BUSINESS CONNECTION IN INDIA , FOR THE SIMPLE REASON THAT NONE OF THESE JUDICIAL PRE CE DENTS DEALS WITH A SITUATION LIKE ONE THAT WE ARE DEALING WITH , AND, AS VERY APT L Y PUT BY HON B LE SUPR EME COURT IN R D AGARWAL S CASE (SUPRA ), THAT TH E REVIEW OF THE JUDICIAL PRE CEDENTS IS NOT FOR EVOLVING A DEFINITION APPLIC ABLE GENERALLY TO ALL CASES BUT WITH A VIEW TO ILLUSTRATE WHAT RELA TIONS BETWEEN THE NON - RESIDENT AND ACTI VITY IN THE TAXABLE TERRIT ORIES WHICH CONTRIBUTED TO THE EARNINGS OF THE I NCOME MAY OR MAY NOT BE REGARDED AS BUSINESS CONNECTIONS . NONE OF THE JUDICIAL PRECEDENTS BEFORE US HAD AN OCCASION TO EXAMINE AN INTANGIBLE BUSINESS CONNECTION , AND, THERE IS THUS NO GUIDANCE AVA I LABLE ON T H IS ISSUE. THE BUSINESS CONNECTION IN INDIA, ON THE FACTS OF TH E PRESENT CASE, IS INTANGIBLE INASMUCH AS IT IS A RELATI ONSHIP RATHER THAN AN OBJECT, BUT IT IS A SIGNIFICANT BUSINESS CONNECTION WHICH HAS RESULTED IN INCOME ACCRUING AND ARISIN G ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 10 OF 17 TO THE NON - RE SIDENT, BUT FOR WHICH THERE WOULD NOT HAVE BEEN ANY BUSINESS EXPEDIENCY IN MAKING THE IMPUGNED PAYMENT TO THE NON - RESIDENT CELEBRITY. [12] LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON A SERIES OF JUDGMENTS BY HON BLE COURTS ABOVE, AND ALL THESE JUDGM ENTS ARE SAID T O SUPPORT THE P RO POSITION THAT IN ORDER TO BE TAXABLE IN INDIA, THE ASSESSEE MUST CARRY OUT THE ECONOMIC ACTIVITY IN INDIA OR RENDER THE RELATED SERVICES IN INDIA . WE DO NOT THINK THIS LINE OF REAS ONING HAS MUCH RELEVANCE TO THE ISSUE B EFO RE U S, AND THAT ISS UE IS WHETHER PARTICIPATION IN A N INDIA CENTRIC EVENT, CARRIED OUT AT THE I NSTANCE OF INDIAN ENTITIES FOR FURTHERANCE OF THEIR BUSINESS INTERESTS IN INDIA AND SPECIFICALLY TARGETED FOR THE INDIAN CUSTOMERS BY WAY OF BELOW THE LINE PUBLICIT Y SUCH AS ON I NTERNET, SOCIAL MEDI A, PRESS RELEAS EE AND NEWS REPORTS ETC, CAN BE SAID TO BE T AXABLE IN THE HANDS OF A NON - RESIDENT UNDER SECTION 5(2 )(B) . WHILE WE HAVE HIGHEST RESPECTS FOR THE JUDICIAL PRE CEDENTS, WE DO NOT THINK GIVEN THE PECUL IAR QUESTI ON THAT WE AR E DEALING, THESE JUD ICIAL PREC EDENT S WILL HA VE ANY APPLICATIO N. THE BUSINESS MODELS WERE ALWAYS CONSTANTLY CHAN GING, BUT POST THE INTERNET AND SOCIAL MEDIA REVOLUTION , THE BUS INESS M ODELS HAVE CHANGED SO DRASTI CALLY THAT TH E VERY FUNDAMENTAL R ULES OF GAME HAVE CH ANGED. THE VERY CONCEPT OF BELOW THE LINE PUBLICITY IS SOMETHING QUITE FUNDAMENTALLY NEW, AND, BEYOND ANY DISPUTE OR CONTRO VER SY, NONE OF THE J UDICIAL PR EC E DENTS CITE D BEFORE US HAS AN YTHING TO DO WITH SUCH CONTEMPORARY INSTRUMENTS IN FLUENCING CUSTOMER BEHAVIOUR. GIVEN THE PECULIAR SITUATION THAT WE ARE DEA LING WITH , AND FINDING THAT THE PRI NC IPLES LAID DOWN IN THE CONTEXT OF RATHER PRIMITIVE TRADE, COMMERCE OR SERVICE S ARE NOT OF MUCH RELEVANCE IN TH E PRESENT CONT EXT, WE ARE NOT INCL I NED TO DEAL WITH THESE JUDICIAL PRECEDENTS IN ANY DETAI L. IN ANY CASE, AS O BSERVED BY HON BLE SUPREME COURT IN THE OFT Q UOTED CASE OF CIT VS SUN E N GINEERING WORK S PVT LTD [(1992) 198 I TR 2 97 (SC)] , IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OUT A WOR D OR A SENTENCE FROM THE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTEXT OF THE QUESTION UNDER CONSIDERATION AND TREAT IT TO BE THE COMPLETE 'LAW' DECLARED BY THIS COURT. THE JUDGMENT MU ST BE READ AS A WHOLE AND THE OBSER VATIONS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF THE Q UESTIONS WHICH WERE BEFORE THIS COURT . WE HAVE CAREFULLY PERUSED JUDICIAL PRECEDENTS ON TH IS ISSUE, AND WE DO NOT FIND ANY DECISION WHICH DEALS W ITH, D IRECTL Y OR INDIRECTLY, THE ISSUE TH AT WE ARE DEALING WITH OR SO METHI NG EVEN CLOS ELY SIMILAR TO IT. IN OUR HUMBL E UNDERSTANDING, THE ISSUE REQUIRING OUR ADJUDICATION , IS A ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 11 OF 17 NEW ISSUE AND IT IS REQUIRED TO BE DEALT WITH US ON THE F IRST PRINCIPLE S , AND THAT IS EXACTLY WHAT WE HA VE DONE. [1 3 ] L EARNED C OUNSE L HAS THEN POINTED OUT THAT THE CASE OF THE ASSESSING OFFICER WAS CONFINE D TO TA XABILITY AS ROYALTIES UNDER SECTION 9 (1)(VI) AND I T WAS NOT OPEN TO U S TO GO BEYOND THE CASE MADE OUT BY THE ASSESSING OFFICER. THIS PLEA , HOWEVER, PROCEEDS ON THE MIS CONCEPTION OF FACTS AND THE LE GAL POSITION . UNDOUBTEDLY , OUR P OWERS ARE RESTRIC TED T O DEALING WITH THE IS SUES RAISED BEFORE US . WHILE ON THI S ASPECT OF THE MATTER, IT IS USEFUL TO REMEMBER, AS WAS HELD BY THE HONBLE GUWAHATI HIGH COURT IN THE CASE OF JEYPORE TIMBER & VENEER MILLS ( P.) LTD. V. CIT [( 1982 ) 137 ITR 415 (GAU) ] AS FO LLOWS: 'PARLIAMENT IN ITS WISDOM HAS CONFERRED UPON THE TRIBUNAL BROAD AND SWEEPING POWERS BUT AT THE SAME TIME CONTRO LLED THE POWERS BY REQUISITE CONSTRICTION. THE PROVISION OF SECTION 254 OF THE ACT IS AN ENABLING AS WELL AS DISABLING PROVISION. A PASSI NG GLANCE CREATES AN IMPRESSION THAT THE TRIBUNAL HAS BEEN ENDOWED WITH PLENARY POWER UNDER SECTION 254 OF THE ACT TO P ASS ANY ORDER AS IT THINKS FIT. HOWEVER, IT IS NOT SO, AS IT WILL APPEAR IN THE EXPRESSIO N SUCH ORDERS THEREON AS IT THINKS FIT, IN SEC TION 254. THE WORD THEREON IN THE EXPRESSION IS A SERIOUS CONSTRICTION ON THE EXERCISE OF POWER BY THE TRIBUNAL. IT C AN DECIDE ONLY THE POINTS OR GROUNDS RAISED BEFORE IT WHEREAS THE IT AUTHORITIES CAN TRAV EL BEYOND THE GROUNDS AND CONSIDER THE ENTIRE AS SESSMENT. THE TRIBUNAL HAS NO POWER FOR THE ENHANCEMENT OF ANY PENALTY OR ASSESSMENT NOR CAN IT REMAND A CASE WITH THE OBJECT OF SUCH ENHANCEMENT .' [EMPHASI S, BY UNDERLING, SUPPL IED BY US NOW] [1 4 ] CLEARLY, THERE CANNOT BE ANY D ISPUTE THAT ONCE AN ISSUE I S RAISED BEFORE THE TRIBUNAL, IN ACCORDANCE WITH THE LAW, THE TRIBUNAL IS DUTY BOUND TO AD J UDICATE UPON THE SAME . OF COURSE, IT S HOULD NOT RESULT IN THE ENHANCEMENT OF ASSESSMENT OR IT SHOULD NOT BE DECIDED WITHOUT AFFORDING DUE OPPORTUNITY OF HEA RING TO T H E ASSESSEE. T HE MATTER WAS HEARD AT LENGTH ON 29 TH J ANUARY 2020, 31 ST JANUARY 2020 AND 6 TH FEBRUA RY 2020, AND IT WAS SPEC IFICALLY P UT TO THE A SSESSEE AS TO WHY , IN THE L IGHT OF INTIMATE BUSINESS CONNECTION WITH INDIA, THE INCOME TO THE INTERNATIONAL CELEBRITY SHOULD NOT BE BROUGHT TO TAX UNDER SECT ION 5(2)(B). WE MAY ALSO ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 12 OF 17 MENTI ON THAT THIS ISSUE WAS RAISED BY THE ASSESSEE ITS ELF, IN THE SECOND G ROUND OF APPEAL WHICH IS REPRODUC ED BELOW FOR READY REFERENCE : GROUND II: NON TAXABILITY OF APPEARANCE FEED PAI D TO THE CELEBRITY UNDER THE ACT 2.1 BASED O N THE FACTS AND CIRCUMST ANCES OF THE CASE AND IN LAW, T HE LEARNED CI T (A) HAS ERRED IN NOT APPRECIATIN G THAT THE APPEARANCE FEES PA I D TO THE CELEBRITY BY THE APPELL ANT WAS IN THE NATURE OF BUSINESS INCOME OF THE CELEBRITY NOT LIABLE TO TAX IN INDIA UNDER SE CTION 5 READ WITH SECTION 9(1 )( I) OF THE ACT, IN THE ABSENCE OF CELEBRITY S CONNECTIONS / OPERATIONS I N INDIA. 2.2 WIT HOUT PREJUDICE TO GROUND NO. 2.1 ABOVE, THE LE ARNED CIT(A) HAS E RRED IN INCORRECTLY PRESUMING THAT THE EVENT WAS HELD BY THE APPELLANT O UTSIDE INDIA ONLY TO TAKE POSITION O F NOT APPLYING WHT ON PA YMENT OF APPEARANCE FEES TO THE CELEBRITY ON THE PREMISES THAT THE APPEA RANCE OF THE CELEBRITY WAS OUTSIDE INDIA. 2.3 THE APPELLANT PRAYS HON BLE TRIBUNAL TO DIRECT THE LEARNED ITO TO TREAT THE PAYMENT OF APPEA RANCE FEES PAID TO THE CELEBRITY AS NOT TAXABLE IN INDIA UNDE R THE ACT. [ 1 5 ] THE ASSESSEE HAS THUS HIMSELF RAISED THIS ISSUE AN D WE HAVE ADJUDICATED U P ON T HE SAME. WHETHER IT WAS RAISED BY THE ASSESSING OFFICER OR BY THE CIT(A) DOES NOT MAKE ANY DIF FERENCE. THE SUBJECT MATTER OF THE DISPUTE IS TH E SAME, I.E. THE TAX WITHHOLDING OBLIGAT IO NS IN RESPECT OF PAYMENTS MADE TO AN INTERNA TIONAL CELE BRITY IN A PRODUCT LAU NCH EVENT OUT SIDE IN DIA IS THE SAME , AND THE A SSESSEE HAS BEEN HEARD AT LENGTH, SPREAD OVER THREE SESSIONS , IN RESPECT OF THE SAME. ONCE WE HOLD THAT THE INCOME IN QUESTION WAS TAXABLE IN INDIA UNDER SECTION 5(2) READ WITH SECTION 9(1)(I), IT IS NOT REALLY NECESSARY TO DEA L WITH TAXABIL ITY UNDER THE O THER PROVISIONS OF THE A C T. SUFFICE TO SAY THAT UNDER TH E PROVISIONS OF THE ACT, THE PAYMENT IN QUESTION IS TAXABLE IN INDIA IN THE HANDS OF THE NON - RES I DENT. IT IS NO BODY S CASE, NOR CAN IT BE ANY ON E S CASE, THAT THE DECISION OF THE TRIBUNAL RESULTED IN AN ENHANCEMENT. WHAT HAS B EEN DONE IS TO ADJUDICATE UPON THE QUESTION WHETHER THE A SSESSEE HAD THE LIABILITY TO WITHHOL D THE TAX FR OM THE PAYMENT IN QUESTION. THE ASSESSEE HAS NOT BEEN SADDLED WITH A NEW TAX WITHHOLDING LIABILITY. IN ANY CASE, WHILE EXAMINING POWERS OF THE TRIBUNAL TO DEAL ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 13 OF 17 WI TH A N ASPECT OF THE MATTER WHICH HAS NOT BEEN RAISED BY THE ASS ESSING OFFICER , WE MA Y USEFULLY REFER TO THE FOLLOWING OBSERVATIONS MADE BY A SPECIAL BENCH OF THIS TRIBUNAL, IN THE CASE OF TATA COMMUNI CATIONS LTD VS J CIT [(200 9) 121 ITD SB 384 (MUM) ] : . THE ISSUE BEFORE THE TRIBUNAL WAS WHETHER THE ASSESSEE WAS ENTITLED TO RELIEF UNDER THE ABOVE PROVISION. IT WAS BOUNDEN DUTY OF THE TRIBUNAL TO CONSIDER AND DECID E THE ABOVE ISSUE AND TO EXAMINE THAT EACH OF THE CONDITION SPECIFIED BY THE SECTION IS SATISFIED. THE QUESTION RELATING TO SATISFICTION OF THE CONDITIO NS COULD EVEN BE RAISED BY THE RESPONDENT (DEPARTMENT) IN APPEAL BEFORE THE TRIBUNAL AND IT WAS SO RAISE D. THE POSITION ON THIS QUESTION, RELATING TO POWER AND JURISDICTION OF THE TRIBUNAL IS MORE THAN CLEAR AS PER DECISION OF ALLAHABAD HIGH COURT IN THE C ASE OF PHOOL CHAND GAJANAND V. CIT [1966] 62 ITR 232 WHICH HAS BEEN APPLIED BY FULL BENCH OF JURISDICTIONAL HIGH COURT IN THE CASE OF AHMEDABAD ELECTRICITY CO. LTD. V. CIT [1993] 199 IT R 351 (BOM.) . THEIR LORDSHIPS HAVE DISCUSSED IN DETAIL, AS TO HOW POWERS OF THE TRIBUNAL ARE TO BE EXERCISED. IN THE CASE OF HUKUMCHAND MILLS LTD. V. C IT [1967] 63 ITR 232 (SC) , WHICH HAS BEEN FOLLOWED BY THE HON'BLE BOMBAY HIGH COURT'S FULL BENCH JUDGMENT IN THE CASE OF AHMEDABAD ELECTRICITY CO. LTD. ( SUPRA ). THEIR L ORDSHIPS OF HON'BLE SUPREME COURT WERE IN SEISIN OF A SITUATION IN WHICH IT WAS ARGUED BEFORE THEIR LORD SHIPS THAT 'THE TRIBUNAL WAS NOT COMPETENT TO GO INTO THE QUESTION WHETHER THE PROVISIONS OF PARAGRAPH 2 OF TAXATION LAWS ORDER WERE APPLICABLE TO THE P RESENT CASE AND THE RESPONDENT ( I.E., THE REVENUE) SHOULD BE ALLOWED TO RAISE THIS CONTENTION FOR THE FI RST TIME BEFORE THE TRIBUNAL'. IN ESSENCE, THEREFORE, ONE OF THE QUALIFYING CONDITION, WHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER OR APPELLATE CO MMISSIONER, WAS DISPUTED FOR THE FIRST TIME BEFORE THE TRIBUNAL. IT WAS IN THIS BACKGROUND, AND DEALING WITH THE POWERS OF THE TRIBUNAL UNDER SECTION 33(4) OF THE 1922 ACT, WHICH ARE EXACTLY THE SAME AS UNDER SECTION 254(1) OF THE PRESENT INCOME - TAX ACT, 1 961, HON'BLE SUPREME COURT, INTER ALIA , OBSERVED AS FOLLOWS : '8. ...TRIBUNAL HAD JURISDICTION TO PERMI T THE QUESTION TO BE RAISED BEFORE IT FOR THE FIRST TIME IN APPEAL. THE POWER OF THE TRIBUNAL, IN DEALING WITH THE APPEALS ARE EXPRESSED IN SECTION 33(4 ) IN THE WIDEST POSSIBLE MANNER.... 9. THE WORD 'THEREON' IN SECTION 33(4) OF THE 1922 ACT, OF COURSE, R ESTRICTS THE JURISDICTION OF THE TRIBUNAL TO THE SUBJECT - MATTER OF APPEAL. THE WORDS 'PASS SUCH ORDERS AS THE TRIBUNAL THINK FIT' INCLUDE ALL THE POWERS (EXCEPT POSSIBLY ENHANCEMENT) WHICH ARE CONFERRED ON AAC UNDER SECTION 31. ... 10. IN THE PRESENT CASE, THE SUBJECT - MATTER OF APPEAL BEFORE THE TRIBUNAL WAS THE QUESTION AS TO WHAT SHOULD BE THE PROPER WRITTEN DOWN VALUE OF THE BUILDING, MACHINERY ETC. OF THE ASSESSEE FOR CALCULATING DEPREC IATION UNDER SECTION 10(2)( VI ) OF THE ACT. IT WAS CERTAINLY OPEN TO THE DEPARTMENT, IN THE APPEAL FILED BY THE ASSESSEE BEFORE THE TRIBUNAL, TO SUPPORT THE FINDINGS OF THE AAC WITH REGARD TO WRITTEN DOWN VALUE ON ANY OF THE GROUNDS DECIDED AGAINST IT.... W E ARE ACCORDINGLY OF THE VIEW THAT THE TRIBUNAL HAD JURISDICTION TO ENTERTAIN THE ARGUMENT OF THE DEPARTMENT IN THIS CASE AND DIRECT THE ITO TO FIND OUT WHETHER ANY DEPRECIATION WAS ACTUALLY ALLOWED.... AND WHETHER SUCH DEPRECIATION SHOULD BE TAKEN INTO AC COUNT FOR COMPUTING THE WRITTEN DOWN VALUE.' ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 14 OF 17 16 . THE FACTS OF THE CA SE BEFORE US ARE MATERIALLY SIMILAR TO THE ABOVE CASE BEFORE THE HON'BLE SUPREME COURT. IN THE PRESENT CASE ALSO , THE CONDITION REGARDING PROVIDING ELIGIBLE TELECOM MUNICATION SERVICES WAS NOT DISCUSSED BY THE ASSESSING OFFICER AND THE COMMISSIONER (APPEALS ) AND YET THIS ISSUE WAS TAKEN UP BY THE DEPARTMENTAL REPRESENTATIVE BEFORE US. THE SAME WAS THE SITUATION IN H UKUMCH AND MILLS LTD.' S CASE ( SUPR A ) WHEREIN, AS NOTED BY THE HON'BLE SUPREME COURT IN PARAGRAPH 4 OF THEIR JUDGMENT, 'IT WAS URGED BEFORE THE TR IBUNAL BY THE DEPARTMENT THAT ALTHOUGH THE ITO HAD NOT CONSIDERED THE PROVISIONS OF PARAGRAPH 2 OF SECTION 2 OF TAXATION LAWS ORDER, THE SAID PROVISIONS WERE APPLICABLE IN THE PRESENT CASE AND CERTAIN AMOUNTS OF DEPRECIATION, WHICH ARE ALLOWED UNDER THE IN DUSTRIAL TAX RULES, WHICH HAD THE FORCE OF LAW IN INDORE STATE, WERE REQUIRED TO BE DEDUCTED IN ARRIVING AT WRI TTEN DOWN VALUE OF THE ASSETS OF THE ASSESSEE'. THIS PLEA WAS ACCEPTED BY THE TRIBUNAL AND THE HON'BLE SUPREME COURT CONFIRMED THE ACTION OF THE TRIBUNAL IN DOING SO. IN THIS VIEW OF THE MATTER, NOT ONLY THAT ADMITTING THE PLEA REGARDING THE ASSESSEE NOT R ENDERING ELIGIBLE TELECOMMUNICATION SERVICES DOES NOT SUFFER FROM ANY MISTAKE APPARENT ON RECORD, BUT IT DOES NOT SUFFER FROM ANY MISTAKE AT ALL. THE STAND SO TAKEN BY THE TRIBUNAL IS CLEARLY IN CONFORMITY WITH THE LAW LAID DOWN BY THE HON'BLE SUPREME COUR T. ONCE THE TRIBUNAL IS CALLED UPON TO EXAMINE AS TO WHETHER OR NOT THE ASSESSEE IS ENTITLED TO A CLAIM OF DEDUCTION, THERE IS NO ESCAPE FROM ITS DUTY TO ENSURE THAT THE REQUIREMENTS OF SECTION ARE FULLY COMPLIED WITH AND THE TRIBUNAL CANNOT SHUN AWAY FROM ITS DUTY TO EXAMINE ALL THE ELIGIBLE CONDITIONS MERELY ON THE GROUND THAT SOME OF THESE CONDITIONS ARE NOT SPECIFICALLY REJECTED BY THE AUTHORIT IES BELOW. AS IS CLEARLY EVIDENT FROM THE OBSERVATIONS MADE BY THE ASSESSING OFFICER, WHICH HAVE BEEN EXTRACTED HEREINBEFORE, THE CLAIM IS REJECTED ON ONE GROUND BUT SUCH A REJECTION CANNOT BE CONSTRUED TO MEAN THAT ALL OTHER CONDITIONS ARE TAKEN AS COMPLI ED WITH . [1 6 ] QUITE CLEARLY , THEREFORE, WHERE ASSESSING OFFICER HAS HELD THE TAXABILITY OF AN INC OME, ON GROUND A AT THE ASSESSMENT STA GE AND THE SAME TAXABILITY IS SOUGHT TO BE JUSTIFIED O N GROUND B AT THE APPELLATE STAGE, THERE IS NO INFIRMITY IN TH E STAND SO TAKEN . IN ANY CASE, ONCE A SPECIFIC GROUND OF APPEAL IS TAKEN, AND THE ASSESSEE FAILS IN THAT G ROUND, T HE OTHER ISSUES ARE RENDERED ACADEMIC INASMUCH AS WHETHER THESE ARE DECIDED AGAINST THE ASSESSEE O R NOT, THAT WOULD NOT M AKE ANY DIFFERENCE TO THE ULT IMATE OUTCOME OF THE APPEAL. HOWEVER, THIS AS PECT OF THE MATTER IS NOT EVEN RELEVANT IN THE PRESENT CONTEXT INASMUCH AS THE ASSESSEE HAD RAISED A SPECIFIC GROUND OF APPEAL WHICH WAS DISPOSED OF BY US. O NC E THE TAXABILITY IS UPHELD ON THIS GROUND, A LL OTHER ASPECTS OF TAXABILIT Y UNDER THE DOMESTIC LAW A RE ACADEMIC AND NEED NOT BE ADJUDICATED UPON. [1 7 ] LEARNED COUNSEL HAS ALSO LAID LOT OF EMPHASIS ON TH E SC HEME OF SECTION 115 BBA WHICH PROVIDES FOR TAXATION AN ENTERTAINER, WHO IS NOT A CITIZEN OF INDIA AND IS A NON - RESIDENT, INCLUDES ANY INCOME RECEIVED OR RECEIVABLE FROM HIS PERFORMANCE IN INDIA . IT IS ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 15 OF 17 SUBMITTED THAT THIS REFER S TO T HE P ERFORMANCE IN INDIA IMPL YING THEREBY THAT PERFORMA NCE OUTS IDE INDIA IS OU TSIDE THE AM BIT OF TAXATION IN INDIA . HAVING HEARD THE RIVAL CONTENTIONS ON THIS P LEA AND HAVING CONSIDERED MATER IAL ON RECORD , W E ARE UNABLE TO SHARE THIS PERCEPTION. SECTION 115 BBA DEALS WITH THE MODE AND R ATE O F TAXATION IN THE HANDS OF NON - RES IDENT SPORTSM EN, NON - RESIDENT SPORTS ASSOCIA TIONS AND INSTITUTIONS , AND NON - RE SIDENT ENTERTAINERS . TH ESE MODAL ITIES OF TAXATION , IN OUR CO NSIDERED VIEW, CANNOT BE TREATED RESTRICTION S ON CHARGEAB I LITY TO TAX UNDER SECTION 5(2)(B). IN CASE A N INCOME IS NOT ELIGIBLE TO S PECIFIED TREATMENT UNDER SECTIO N 115B BA, ON ACCOUNT OF NOT FULFILLING T HE CRITERION SET OUT THEREIN, SUCH AN INCOME IS AT BEST TAXABLE IN THE NORMAL COURSE IN THE HANDS OF THE NO N - RESIDENT ENTERTAINER IN INDIA. WE REJECT THIS PLEA AS W ELL. [1 8 ] SO FAR AS TREATY PROTECTION IS CONCERNED , LIMITED PLEA OF THE LEARNED COUNSEL IS THAT SINCE THE INCOME ON ACCOUNT OF PAR TICIPATION I N A PROD UCT LA UNC H EVENT OU TSIDE INDIA , AS IN THIS CASE, IS NOT CO VERED BY ANY SPECIFIC PROV ISIONS - INCLU DING ART I CLE 18 DEALING WITH INCOME OF THE ENTERTAINERS, UN DER ART IC LE 23(1) OF INDO US TAX TREATY, IT CAN ONLY BE TAXED IN THE RESIDENCE STATE. OUR ATTENTION IS INVITED TO THE WORDINGS OF ARTICLE 23(1) TO THE EF FECT SUBJECT TO THE PROVISIONS OF PARAGRAPH 2, ITEM S OF INCOME OF A RESIDENT OF A CONTRACTING STATE, WHEREVER ARISING , WHICH ARE NOT EXPRESSLY DEALT WITH IN THE FOREGOING ARTICLES OF THIS CONVENTION SHALL BE TAXABLE ONLY IN THAT CONTRACTING STATE . THIS PLEA IS FIT TO BE ONLY NOTED AND REJECTE D FOR TH E SIM PLE REAS ON THAT ARTICLE 23(3), WHICH IS A NON OBST AN TE CLA USE VIS - - VIS ARTICLE 23(1), PROVIDES THAT N OTWITHSTANDING THE PROVISIONS OF PARAGRAPHS 1 AND 2, ITEMS OF INCOME OF A RESIDENT OF A CONTRACTING STATE NOT DEALT WITH IN THE FOREGOING ARTICLES OF THI S CONVENTION AND ARISING IN THE OTHER CONTRACTING STATE MAY ALSO BE TAXED IN THAT OTHER STATE . WHAT ESSENTIALLY FOLLOWS IS THAT ARTICLE 23(3 ) ALLOWS THE COUNTRY IN WHICH THE INCO ME ARISES, TO TAX SUCH INCOME IF ITS LAW SO P ROVIDES. THE SCHEME OF THE TREA TY IS THUS UNAMBIGUOUS IN ASMUCH AS T HE TREATY PROT ECTION FROM SOURCE TAXATION IS NOT AVAILABLE TO AN INCOME WHICH IS NOT COVERED BY THE SPECIFIC ARTICLES OF THE TREATY IN QUESTION. WE , THEREFORE, R EJECT THE CLAIM OF THE ASSESSEE ON TREATY PROTECTION UNDER ARTICLE 23(1) AGAINST SOU RCE TAXATION OF INCOME IN QUESTION. ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 16 OF 17 [ 19 ] IN THE LIGHT OF THE AB OVE DISCUSSION, WE ARE OF THE C O NSIDERED VIEW THAT THE INCOME EMB EDDED IN PAYMENT TO THE INTERNATIONAL CELEBRITY, FOR PARTICIPATION IN D UBAI A8L LAUNCH EVENT, WAS TAXAB LE IN I NDIA. AS A COROLLARY TO THESE FINDINGS, IN OUR CONSIDERED VIEW, THE ASSESSEE HAD THE LIABILITY T O WITHHOLD TAXES FR OM PAYMENT MADE FOR APPEARANCE MADE BY THE CELEBRITY AT DUBAI A8L LAUNCH E VE NT , AND THE CIT(A) WAS JUSTIFIED IN U PHOLDING IM PUGNED DEMANDS RAISED UNDER SECTION 201 R.W.S 195 OF T HE IN COME TAX ACT,1961. WE , THEREFORE, CONFI RM THE ORDERS OF THE AUTHORITIES BE LOW AND DECLINE TO INTERFE RE IN THE MATTER. [20] AS WE PART WITH THE MAT TER, WE MAY ONLY ADD THAT AS THE BUSI NESS MODELS ARE CONSTANTLY EVOLVING, AND AS THE RAPID C OMMUNICATION MODE S SUCH AS INTERNET AND SOCIAL MEDIA HA VE CO MPLETE LY TR ANS F ORMED THE WAY BUSINESSES COMMUNICATE, IT IS TIME THAT THE LAW IS SEEN IN TAND EM WITH THE GROUND REALITIES OF THE BUSINESS WOR LD, RATHER THAN IN THE STRICT CONFINES OF WHAT WAS DECIDED I N THE JUDICIA L PREC EDENTS, IN THE C ONTEXT OF A DIFFERENT BUSINESS WORLD WHEN THESE GROUND REAL ITIES DID NOT EXIST . TODAY, VIRTUAL AND INTANGIBLE BUSINESS CONNECTIONS ARE PERHAPS FAR MORE CRITICAL, IMPORTANT AND COMMONPLACE THAN THE CONVENTI ONAL BRICK AND MORTAR BU SINES S CONNECTIONS HALF A CENTUR Y AGO , AND, THEREFORE , TO DISREGARD THESE BUSINESS CONNECTIONS AS A REAL AND INTIMATE BUSINESS CONNECTION LEADING TO E ARNING OF INCOME BY THE NON - RESIDENTS, ON LY BECAUSE HON BLE C O URTS, WHILE DELIVERING JUDGMENTS SEVERAL DECADES AGO , COULD NOT VISUALI ZE THE SA ME AND HEDGE THEIR OBSERVATIONS ABOUT SUCH POSSIB ILITIES , WILL CERTAINLY BE T RA VE S T Y OF JUSTICE . LET US , IN THIS RE SPECT, NOT LOSE SIGHT OF HON'BLE SUPREME COURT S GUIDANCE IN MUMBAI KAMGAR SABHA V. ABDULBAHI FAIZULL ABHAI A IR 1976 SC 1455 WHEREIN THEIR LORDSHIPS HAVE, IN THEIR INIMITABL E AND FELICITOUS WORDS OBSERVED THU S, ' IT IS TRITE, GOING BY ANGLOPHONIC PRINCIPLES THAT A RULING OF A SUPERIOR COURT IS BINDING LAW. IT IS NOT OF SCRIPTURAL SANCTITY BUT OF RATIO - WISE LUMINOS ITY WITHIN THE EDIFICE OF FACTS WHERE THE JUDICIAL LAMP PLAYS TH E LEGAL FLAME. BEYOND THOSE WALLS A ND DE HORS THE MILIEU WE CANNOT IMPART ETERNAL VERNAL VALUE TO THE DECISIONS, EXALTING THE PRECEDENTS INTO A PRISON HOUSE OF BIGOTRY, REGARDLESS OF TH E VARYI NG CIRCUMSTANCES AND MYRIAD DEVELOPMENTS. REALISM DICTATES THAT A JUDGMENT HAS TO BE READ, SUBJECT TO THE FACTS DIRECTLY PRESENTED FOR CONSIDERATION AND NOT AFFECTING THE MATTERS WHICH MAY LURK IN THE DARK .' WE HAVE HIGHEST RESPECTS FOR THE RULINGS BY THE HI GHER JUDICIAL FORUMS, BUT IT WOULD INDEED BE INAPPROPRIATE TO USE THE WORDS AND EXPRESSIONS EMPLOYED IN THESE RULINGS, IN ITA NO. 2195/MUM/2017 ASSESSMENT YEAR: 2015 - 16 P AGE 17 OF 17 ISOLATION, AS COMPLETE EXPOSITION OF LAW AND AS A BLIND MAN'S WALKING STICK, RATHER THAN LUMINOSITY OF JUDICIAL KNOWLEDGE WITH THE B EN EFIT OF WHICH WE HAVE TO PERFORM OUR DUTIES OF OFFICE . [21] IN THE RESUL T, THE APPEAL IS DISMISSED . PRONOUNCED IN THE OPEN CO URT TODAY ON THE 19 TH DAY OF MARCH, 2 020. SD/XX SD/XX A M ARJI T S I NGH PRAMOD KUMAR (J UDICIAL MEMBER) ( VICE PRESIDENT ) MUMBAI , DATED THE 19 TH DAY OF MARCH , 2020 COPIES TO : (1) T HE APPELLANT (2) THE RESPONDENT ( 3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTA NT REGISTRAR INC OME TAX APPELLATE TR IBUNAL MUMBAI BENCHE S, MUMBAI