ACIT(IT), Circle - 1(1), Kolkata , Kolkata V. M/s. Gifford LLP, London

ITA 403/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6221 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 09-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IMLIMEREN JAMIR
• Assessee Lawyers: S K AGARWAL
• Keywords: Business income; Double taxation relief; Period of limitation; Deemed to accrue or arise in india; Retrospective amendment; Permanent establishment; Question of law; Right to appeal; Revised return
• Section: 143(3); 5(2); 234B; 40(a)(ia); 195; 143(2); 254(2); 115A; 44DA; 73; 72; 13(2); 13; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.403-405/KOL/2018 ASSESSMENT YEARS: 2009-10 TO 2011-12 ACIT(IT), CIRCLE-1(1), 2 ND FLOOR, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, KOLKATA-700 107 / V/S . M/S GIFFORD & PARTNERS LTD., C/O MR. SUBRATA MITRA, GARDEN REACH SHIPBUILDERS & ENGINEERS LTD., 43/46 GARDEN REACH ROAD, KOLKATA-700 024 [ PAN NO.AACCG 2101 R ] /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI S.K. AGARWAL, FCA ' /BY RESPONDENT SHRI IMLIMEREN JAMIR, ADDL. CIT-DR /DATE OF HEARING 22-01-2020 /DATE OF PRONOUNCEMENT 12-02-2020 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE THREE REVENUES APPEALS FOR ASSESSMENT YEARS 2009-10 TO 2011-12 ARISE AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-22 , KOLKATAS SEPARATE ORDERS; ALL DATED 28.12.2017 PASSED IN CASE NOS.77, 115 & 161/C IT(A)-22/KOL/2009-10, 2010-11 & 2011-12/2014-15; RESPECTIVELY INVOLVING PROCEEDIN GS 143(3) R.W.S. 144C(3)) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 2 2. IT TRANSPIRES AT THE OUTSET THAT ALL THE ISSUES RAISED IN THE INSTANT THREE APPEAL(S) ARE IDENTICAL. THE REVENUES FORMER SUBSTANTIVE GRI EVANCE SEEKS TO REVERSE THE CIT(A)S ACTION REVERSING THE ASSESSING OFFICERS F INDINGS ADDING 1,72,36,802/-, 2,71,38,058/- & 2,15,62,990/-; ASSESSMENT YEAR-WISE RESPECTIVELY AS TAXABLE IN THE TAXPAYER HANDS ON THE GROUND THAT THE ASSESSEE HAD SET UP ITS PERMANENT ESTABLISHMENT IN INDIA. LEARNED DEPARTMENTAL REPRESENTATIVE HAS T AKEN PAINS TO FILE REVENUES IDENTICAL SUBMISSIONS AS FOLLOWS:- THE BRIEF FACTS ARE THAT:- THE ASSESSEE I.E GIFFORD & PARTNERS LTD (SINCE ME RGED WITH GIFFORD LLP) ENTERED INTO A CONTRACT WITH, A FOREIGN COMPANY INCORPORATE D IN THE UK, ENTERED INTO A CONTRACT DATED 29.09.2004 WITH GARDEN REACH SHIPBUI LDING ENGINEERS [GRSE] IN INDIA FOR RENDERING ENGINEERING! SUPERVISORY SERVIC ES WITH REGARD TO MODERNIZATION OF THE SHIPYARD OF GRSE. THESE SERVICES WERE TO BE PER FORMED BY THE ASSESSEE IN 3 PHASES AND FEES FOR THE SAME WERE RECEIVED BY THE A SSESSEE IN UOS AND PARTLY IN INDIAN RUPEES. THE ASSESSEE ALSO ENGAGED THE SERVIC ES OF THIRD PARTY SUBCONTRACTORS IN INDIA AND IN THE UK FOR EXECUTION OF THE ABOVE C ONTRACT I.S T.K.ROY AND ASSOCIATES AND INTERCON MARITIME CONSULTANTS PVT LTD IN INDIA AND APPLEDORE INTERNATIONAL LTD IN UK. THE ASSESSEE FILED ORIGINAL RETURN ON 23.07.2009 OFFERING TOTAL RECEIPTS I.E AMOUNTS RECEIVED BOTH IN USO AND TNR TO TAX OF RS 1,69,93,1 27. THE ASSESSEE SUBSEQUENTLY FILED REVISED RETURN OF INCOME ON 31.03.2011 DECLAR ING TOTAL INCOME OF RS 20,80,620. THE CASE WAS SELECTED FOR SCRUTINY VIDE NOTE ISSU ED U/S 143(2) OF I.T. ACT 1961 ON 10.09.2010 AND ASSESSMENT COMPLETED U/S 143(3) ON 1 6.02.2012 COMPUTING TAXABLE INCOME AT RS 1,93,21,422. AO FOUND FROM THE REVISED COMPUTATION OF INCOME F ILED BY THE ASSESSEE THAT THE ASSESSEE ACCEPTS THAT IT HAS PE IN INDIA. THIS IS E VIDENT FROM THE REVISED COMPUTATION OF INCOME SUBMITTED BY THE ASSESSEE WHE RE IT HAS ATTRIBUTED 10% OF TOTAL PROFIT FROM THE PROJECT FOR THE WORK DONE TO ITS PE IN INDIA. THEREFORE AO HELD THAT THE ISSUE OF EXISTENCE OF PE IN INDIA WITHIN THE MEANING OF ARTICLE 5(I) AS WELL AS ARTICLE 5(2) OF THE INDIA-U K DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) FOR THE RELEVANT ASSESSMENT YEAR I S WITHOUT DOUBT AND SETTLED. AO FOUND FROM THAT THE ATTRIBUTION OF 10% OF TOTA L PROFITS TO ITS PE IN INDIA IS A FIRST AND NO SUCH STAND HAS BEEN TAKEN BY THE ASSESSEE IN THE EARLIER YEARS WHEREIN THE TOTAL PROFITS FOR THE PROJECT WORK DONE IN INDIA AN D UK HAS BEEN CONSIDERED IN THE RETURNS. AO FOUND THAT THE ASSESSEE ATTRIBUTED 10% OF TOTA L PROFITS TO ITS PE IN INDIA ON ACCOUNT OF MAN-HOUR BASIS LE THE NUMBER OF MAN WORK - PERFORMED IN INDIA AND UK DURING THE RELEVANT AY. THE AO GAVE ASSESSEE OPPORT UNITY TO PROVIDE ALL THE RELEVANT DOCUMENTS/EVIDENCES IN SUPPORT OF ITS CLAIM BUT THE ASSESSEE ONLY SUBMITTED A ONE PAGE SUBMISSION REGARDING THE DETAIL OF THE NUMBER OF TIME SPENT BY THE ASSESSEE'S EMPLOYEES FOR THE PROJECT WORK DONE IN INDIA AND UK . NO FURTHER DETAILS/DOCUMENTS SUCH AS THE COST/EXPENDITURE ETC WERE PROVIDED ALON G WITH THE SAME. AO FOUND THE NO SEPARATE ACCOUNTS FOR THE OPERATI ONS IN INDIA AND IN UK HAVE BEEN MAINTAINED BY THE ASSESSEE DURING THE RELEVANT AY. THE ENTIRE EXPENDITURE RELATING ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 3 TO THE PROJECT WORK HAS BEEN CONSIDERED IN THE PROF IT & LOSS ACCOUNT OF THE ASSESSEE. NO MATERIAL EVIDENCES HAVE BEEN BROUGHT ON RECORD S UCH AS IN THE FORM OF CONTRACT OR RENEWED/REVISED CONTRACT TO SUGGEST THAT THE NAT URE OF WORK PERFORMED BY THE ASSESSEE FOR THE PROJECT IN INDIA LE CONSULTANCY SE RVICES FOR MODERNIZATION OF GRSE DURING THE RELEVANT YEAR UNDER CONSIDERATION IS DIF FERENT FROM THAT OF EARLIER ASSESSMENT YEARS. ALSO AO FOUND THAT THE SUBMISSION BY THE ASSESSEE THAT THE ISSUE OF ATTRIBUTION OF PROFITS TO THE PE IN INDIA HAD BEEN TAKEN UP IN THE A YS 2007-08 AND 2005-06 BEFORE THE AO AND LD DRP WAS NOT CORRECT AS IN NONE OF THE ORDERS OF BOTH THE AO AND THE LD DRP, KOLKATA HAS THE ISSUE OF ATTRIBUTION OF PRO FITS TO THE PE IN INDIA BEEN MENTIONED AND TOTAL PROFITS FOR THE PROJECT WORK BE EN BROUGHT TO TAX IN INDIA IN BOTH THE AYS 2007-08 AND 2005-06. REMARKS/SUBMISSIONS : ON THIS ISSUE, IT IS HUMBLE SUBMITTED IN SUPPORT OF THE AO'S ACTION, THAT THE ADDITIONS HAVE BEEN MADE BASE D ON EVIDENCES EXAMINED BY AO DURING ASSESSMENT STAGE AND CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE. 1. THE LD CIT(A) ERRED IN MERELY RELYING ON THE ORD ER OF THE HON'BLE ITAT IN EARLIER YEARS IN THE CASE OF THE ASSESSEE AND HOLDING THAT THE ASSESSEE HAS NO PE IN INDIA WITHOUT APPRECIATING THAT THE FACTS AND CLAIMS OF T HE ASSESSEE ARE DIFFERENT FROM THE EARLIER YEARS DECIDED BY HON'BLE ITAT. THE LD CIT(A ) COMPLETELY IGNORED THAT FACT THAT THE ASSESSEE ITSELF HAS SUBMITTED THAT 10% OF THE TOTAL PROFIT HAS BEEN CONSIDERED ATTRIBUTABLE TO THE WORK CARRIED OUT BY THE PE IN INDIA AND HENCE TAXABLE IN INDIA. AO FOUND FROM THE REVISED COMPUTATION OF INCOME FIL ED BY THE ASSESSEE THAT THE ASSESSEE ACCEPTS THAT IT HAS PE IN INDIA. THIS IS E VIDENT FROM THE REVISED COMPUTATION OF INCOME SUBMITTED BY THE ASSESSEE WHE RE IT HAS ATTRIBUTED 10% OF TOTAL PROFIT FROM THE PROJECT FOR THE WORK DONE TO ITS PE IN INDIA. THEREFORE AO HELD THAT THE ISSUE OF EXISTENCE OF PE IN INDIA WITHIN T HE MEANING OF ARTICLE 5(1) AS WELL AS ARTICLE 5(2) OF THE INDIA-UK DOUBLE TAXATION AVOIDA NCE AGREEMENT (DTAA) FOR THE RELEVANT ASSESSMENT YEAR IS WITHOUT DOUBT AND SETTL ED. AO FOUND FROM THAT THE ATTRIBUTION OF 10%OF TOTAL P ROFITS IN A. Y 2009-10, RESPECTIVELY TO ITS PE IN INDIA IS A FIRST AND NO SUCH STAND HAS BEEN TAKEN BY THE ASSESSEE IN THE EARLIER YEARS WHEREIN THE TOTAL PROFITS FOR THE PRO JECT WORK DONE IN INDIA AND UK HAS BEEN CONSIDERED IN THE RETURNS. IN THE EARLIER AYS 2005-06 & 2007-08, DEDUCED IN FAVOR OF ASSESSEE BY THE HON'BLE IT AT AND RELIED O N BY THE LD CIT(A) IN THE INSTANT A. Y, THE ONLY STAND OF THE ASSESSEE WAS THAT IT HA S NO PE IN INDIA. 2. IN PAGE 22 PARA 1.4 OF LD CIT(A)'S ORDER, THE AS SESSEE SUBMITTED BEFORE THE LD CIT(A) THAT THAT IN THE REVISED RETURN OF INCOME FO R A.Y 2009-10, THE APPELLANT CONTENDED THAT IT DOES NOT CONSTITUTE A PE IN INDIA UNDER ARTICLE 5 OF THE DT AA BETWEEN INDIA AND THE UK. HOWEVER, IN THE ANNEXURE I FILED ALONG WITH THE REV ISED RETURN OF INCOME WHICH IS A STATEMENT SHOWING REVISED COMPUTATION OF TOTAL INCO ME AND TAX UNDER THE NORMAL PROVISIONS OF THE ACT, THE ASSESSEE HAS ITSELF WORK ED OUT THE PROFIT ATTRIBUTABLE TO ITS PE IN INDIA. THE REASON FOR THE SAME HAS BEEN MENTI ONED IN THE NOTE 1 OF THE REVISED COMPUTATION OF THE TOTAL INCOME OF THE ASSE SSEE, WHICH IS AS UNDER: 'IN THE INSTANT CASE, DURING THE YEAR ENDED 31 MARCH 2009, A MAJOR PART OF THE WORK ON THE GRSE PROJECT WAS CARRIED OUT BY THE ASSESSEE IN UK WHILE ONLY A RELATIVELY SMALL PARTY OF THE WORK WAS DONE IN INDIA. IN TERMS OF TH E TIME SPENT ON THE PROJECT, WHILST, 1914 MAN-HOURS OF WORK WAS DONE IN UK, ONLY 214 MAN -HOURS WAS SPENT ON THE ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 4 PROJECT IN INDIA, DURING THE YEAR UNDER CONSIDERATI ON. AS SUCH, BASED ON THE SAID TIME SPLIT, 10% OF THE TOTAL PROFIT HAS BEEN CONSIDERED ATTRIBUTABLE TO THE WORK CARRIED OUT BY THE PE IN INDIA AND HENCE TAXABLE IN INDIA.' THEREFORE, IT IS APPARENT THAT THE APPELLANT HAS RE PRESENTED WRONG FACTS TO THE LD CIT(A). 3. ARTICLE 1.8 OF THE AGREEMENT BETWEEN THE ASSESSE E AND GRSE PROVIDES FOR THE PLACE IN WHICH THE SERVICES ARE TO BE RENDERED AND THE SAME READS AS FOLLOWS: ' 1.8. LOCATION THE SERVICES SHALL BE PERFORMED AT THE PREMISES OF GARDEN REACH SHIPYARD, KOLKATA AND WHERE THE LOCATION OF A PARTICULAR TASK IS NOT SO SPECIFIED, AT SUCH LOCATIONS, AS GRSE MAY APPROVE.' THEREFORE IT IS CLEAR THAT SERVICES WERE TO BE PERF ORMED ONLY AT THE PREMISES OF GARDEN REACH SHIPYARD, KOLKATA AND WHERE THE LOCATI ON OF A PARTICULAR TASK IS NOT SO SPECIFIED, AT SUCH LOCATIONS, AS GRSE MAY APPROVE. IN THIS REGARD, NO APPROVAL LETTER OF GRSE IS MENTIONED IN THE SUBMISSIONS OF THE ASSE SSEE TO THE EFFECT THAT GRSE APPROVED FOR SERVICES TO BE PERFORMED FROM UK. FROM THE SUBMISSIONS OF MADE BY THE ASSESSEE BEFORE THE LD CIT(A) AS SEEN IN PAGE 21 POINT 1.3 OF CIT(A) ORDER, THE DETAILS OF W ORK PERFORMED IN UK AND INDIA ARE AS FOLLOWS:- IN INDIA- ATTENDING MEETING WITH GRSE AND INTERVI EWING THE POTENTIAL STAFFS FOR THE SITE SUPERVISION WORK. IN UK- REVIEW OF THE CONSTRUCTION METHODS BEING U NDERTAKEN BY THE INDIAN CONTRACTORS AT THE SITE ON BEHALF OF GRSE. THEREFORE, FROM THE ABOVE; THAT THE CLAIM OF THE AS SESSEE THAT ITS INCOME FROM FOREIGN SERVICES IS NOT ATTRIBUTABLE TO ITS PE IN INDIA IS NOT CORRECT. THE DETAILS OF WORK PERFORMED IN UK CONSISTS OF REVIEW OF THE CONSTRUCT ION METHODS BEING UNDERTAKEN BY THE INDIAN CONTRACTORS AT THE SITE ON BEHALF OF GRS E. IT WAS REITERATED BY THE ASSESSEE BEFORE THE LD CIT (A) THAT FOR PHASE I & II , NO SERVICE HAS BEEN RENDERED IN INDIA AND THE LIMITED NUMBER OF VISITS THAT WAS MADE BY THE ASSESSEE TO THE G RSE SITE WAS ONLY FOR THE COL LECTION OF DRAWINGS WHICH WAS NECESSARY FOR THE PURPOSES OF THE REPORTS AND DRAWI NGS WHICH WERE PREPARED AND SERVICES FORM UK. THEREFORE, FOR THE PURPOSES OF TH E REPORTS AND DRAWINGS WHICH WERE PREPARED AND SERVICES PROVIDED FROM UK WHICH T HE ASSESSEE CLAIMS AS NOT ATTRIBUTABLE TO ITS PE IN INDIA, VISITS WERE MADE B Y THE ASSESSEE TO THE GRSE SITE FOR THE COLLECTION OF DRAWINGS WITHOUT WHICH SUCH REPOR TS AND DRAWINGS WOULD NOT HAVE BEEN POSSIBLE. THEREFORE ITS INCOME FROM FOREIGN SERVICES IS ATTRI BUTABLE TO ITS PE IN INDIA. 4. ARTICLE S OF THE INDIA -UK DTAA DEFINES THE TERM PERMANENT ESTABLISHMENT. AS PER ARTICLE 5(1), THE TERM PERMANENT ESTABLISHMENT MEAN S A FIXED PLACE OF BUSINESS THROUGH WHICH THE BUSINESS OF AN ENTERPRISE IS WHOL LY OR PARTLY CARRIED ON. ARTICLE 5( I) STIPULATES 3 CRITERIA: A) PLACE OF BUSINESS I.E SOME PHYSICAL PRESENCE EG SOME PREMISES OR EQUIPMENT WHICH ARE USED IN BUSINESS ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 5 B) PLACE OF BUSINESS SHOULD BE FIXED IN THE SENSE T HAT IT IS A DISTINCT PLACE WHICH EXHIBITS SOME DEGREE OF PERMANENCE. THE FACT THAT T HE ENTERPRISE HAS A CERTAIN AMOUNT OF SPACE AT ITS DISPOSAL WHICH IS USED FOR B USINESS ACTIVITY IS SUFFICIENT TO CONSTITUTE A PLACE OF BUSINESS. C) THE ENTERPRISE SHOULD NOT ONLY HAVE A FIXED PLAC E OF BUSINESS BUT ALSO WHOLLY OR PARTLY BUSINESS SHOULD BE CARRIED ON THROUGH THAT F IXED PLACE. THE STAND OF THE ASSESSEE WAS THAT: 1) OFFICE PREMISES PROVIDED BY THE GRSE IS ONLY FOR THE PURPOSE OF DISCHARGING SERVICES UNDER THE CONTRACT WITH GRSE 2) IT CANNOT BE USED FOR ANY OTHER PURPOSES OR FOR CARRYING OUT ANY OTHER BUSINESS OF THE ASSESSEE IN INDIA. 3) THE ASSESSEE CANNOT OCCUPY SUCH OFFICE PREMISES IN ITS OWN RIGHT AND IT DIES NOT SATISFY THE DISPOSAL TEST SO AS TO MAKE IT A PE. 4) EVEN THE USE OF THE PREMISES FOR PROVIDING SERVI CES UNDER THE CONTRACT IS RESTRICTED A THE ASSESSEE AND ITS PERSONNEL HAD TO OBSERVE GRSE'S RULES AND REGULATIONS AND REQUIRED SPECIAL PERMISSION TO USE SUCH OFFICE PREMISES BEYOND NORMAL WORKING HOURS. THE HON'BLE ITAT IN ITS ORDER FOR THE A.Y 2007-08 A ND 2005-06 HELD THAT THE PRESENCE OF ASSESSEE IN INDIA DURING THE PREVIOUS Y EAR WAS ONLY IN CONNECTION WITH THE AGREEMENT FOR MODERNISATION OF SHIPYARD OF GRSE . THE ASSESSEE HAD NOT CARRIED ON ANY BUSINESS IN INDIA. THE PROVISION OF OFFICE S PACE INSIDE THE GARDEN REACH SHIPYARD THEREFORE CANNOT BE SAID TO BE A FIXED PLA CE OF BUSINESS THROUGH WHICH THE BUSINESS OF THE ASSESSEE IS CARRIED ON IN INDIA. TH E HON'BLE ITAT HELD THAT IT CAN BE SAID THAT THERE WAS SOME PHYSICAL PRESENCE OF THE A SSESSEE IN INDIA THROUGH IT WAS RESTRICTED TO RENDERING OF SERVICES UNDER THE AGREE MENT WITH GRSE. IT IS NOT ENOUGH THAT THE ASSESSEE HAS A FIXED PLACE OF BUSINESS IN INDIA BUT THE ASSESSEE SHOULD CARRY ON BUSINESS IN INDIA THROUGH THAT FIXED PLACE OF BUSINESS. THIS REQUIREMENT OF ARTICLE 5(1) OF THE DTAA IS NO SATISFIED IN THE PRE SENT CASE. CARRYING ON OF BUSINESS INVOLVES THE CARRYING ON IN A COUNTRY OF VIRTUALLY ANY ACTIVITY RELATED TO THE BUSINESS OF THE ENTERPRISE. THE HON'BLE ITAT HELD THAT THE AVAI LABILITY OF OFFICE SPACE FOR USE BY THE ASSESSEE AT THE PREMISE OF GRSE WAS FOR THE LIM ITED PURPOSE OF RENDERING OF SERVICES AGREED BETWEEN THE ASSESSEE AND GRSE. IN THE INSTANT CASE THE ASSESSEE HAS MAINTAINED AN OFFICE INSIDE GARDEN REACH SHIPYARD FOR THE DURATION OF THE CONTRACT AND THE A SSESSEE HAD TO BEAR THE CHARGES FOR LOCAL, STD AND ISD CALL, FAXES AND EMAILS FOR A LL THE STAGES OF THE PROJECT. ACCORDING TO APPENDIX 1.3 OF THE CONTRACT BETWEEN THE ASSESSEE AND GRSE, THE ASSESSEE HAD THE AUTHORITY TO POST AT THE SITE COMP ETENT AND QUALIFIED ENGINEERS. THE FACTS CLEARLY SHOW THAT RENDERING OF SUCH SERVICES WAS THE VERY BUSINESS OF THE ASSESSEE. APE COMES INTO EXISTENCE IF BUSINESS IS W HOLLY OR PARTLY CARRIED ON FROM A FIXED PLACE. THUS THE SERVICES RENDERED FROM THE OF FICE WERE CLEARLY PART OF THE BUSINESS OF THE ASSESSEE. ALSO THE CONCEPT OF 'AT T HE DISPOSAL OF CANNOT BE CARRIED TO SUCH AN EXTEND. THE OECD COMMENTARY REQUIRED ONLY T HAT THERE SHOULD BE A CLEAR RIGHT OF USE AVAILABLE TO THE ASSESSEE AND SUCH RIG HT IN THE PRESENT CASE WAS CLEARLY GIVEN IN THE CONTRACT. THE MERE FACT THAT PERMISSIO N OF GRSE WAS TO BE OBTAINED FOR WORKING OVERTIME DOES NOT MEAN THERE WAS NO RIGHT. THESE EXTRA MEASURES WERE ONLY BECAUSE GRSE IS A DEFENCE SHIPYARD AND CONSIDERING ITS SENSITIVITY NEEDED EXTRA SECURITY MEASURES. THE STAND TAKEN BY THE ASSESSEE IS AN INSTANCE OF ARTIFICIAL AVOIDANCE OF PE STATUS. ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 6 5. AO FOUND THAT THE ASSESSEE ATTRIBUTED 10% OF TOT AL PROFITS TO ITS PE IN INDIA ON ACCOUNT OF MAN-HOUR BASIS I.E THE NUMBER OF MAN WOR K- PERFORMED IN INDIA AND UK DURING THE RELEVANT A.Y. THE AO GAVE ASSESSEE OPPOR TUNITY TO PROVIDE ALL THE RELEVANT DOCUMENTS/EVIDENCES IN SUPPORT OF ITS CLAI M BUT THE ASSESSEE ONLY SUBMITTED A ONE PAGE SUBMISSION REGARDING THE DETAIL OF THE N UMBER OF TIME SPENT BY THE ASSESSEE'S EMPLOYEES FOR THE PROJECT WORK DONE IN I NDIA AND UK. NO FURTHER DETAILS/DOCUMENTS SUCH AS THE COST/EXPENDITURE ETC WERE PROVIDED ALONG WITH THE SAME. AO FOUND THE NO SEPARATE ACCOUNTS FOR THE OPE RATIONS IN INDIA AND IN UK HAVE BEEN MAINTAINED BY THE ASSESSEE DURING THE RELEVANT AY. THE ENTIRE EXPENDITURE RELATING TO THE PROJECT WORK HAS BEEN CONSIDERED IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. NO MATERIAL EVIDENCES HAVE BEEN BROUGHT O N RECORD SUCH AS IN THE FORM OF CONTRACT OR RENEWED/REVISED CONTRACT TO SUGGEST THA T THE NATURE OF WORK PERFORMED BY THE ASSESSEE FOR THE PROJECT IN INDIA I.E CONSULTAN CY SERVICES FOR MODERNIZATION OF GRSE DURING THE RELEVANT YEAR UNDER CONSIDERATION I S DIFFERENT FROM THAT OF EARLIER ASSESSMENT YEARS. ALSO AO FOUND THAT THE SUBMISSION BY THE ASSESSEE T HAT THE ISSUE OF ATTRIBUTION OF PROFITS TO THE PE IN INDIA HAD BEEN TAKEN UP IN THE A.YS 2007-08 AND 2005-06 BEFORE THE AO AND LD DRP WAS NOT CORRECT AS IN NONE OF THE ORDERS OF BOTH THE AO AND THE LD DRP, KOLKATA HAS THE ISSUE OF ATTRIBUTION OF PRO FITS TO THE PE IN INDIA BEEN MENTIONED AND TOTAL PROFITS FOR THE PROJECT WORK BE EN BROUGHT TO TAX IN INDIA IN BOTH THE A.YS 2007-08 AND 2005-06. 6. THE SERVICES RENDERED BY THE ASSESSEE TO GRSE WE RE OF TECHNICAL NATURE IN TERMS OF PROVISIONS OF SECTION 9(I)(VII) OF THE IT. ACT 9 16 I READ WITH ARTICLE 13 OF THE INDIA-UK DTAA AND THE CONTRACT AS A WHOLE IN RESPECT OF WHIC H THE FEES FOR TECHNICAL SERVICES AROSE AND THAT SUCH PAYMENT WAS EFFECTIVELY CONNECT ED WITH THE PE IN INDIA. THEREFORE ARTICLE 13(6) WOULD APPLY AND THE GROSS R ECEIPTS BY WAY OF FEES FOR TECHNICAL SERVICES ARE INCLUDABLE IN THE COMPUTATIO N OF BUSINESS INCOME/PROFITS OF PE IN INDIA. THE FOLLOWING JUDGMENTS WHERE THE HON'BLE ITATS HAV E HELD THE EXISTENCE OF ASSESSEE'S PE ARE ALSO RELIED UPON BY THE DEPARTMEN T: [2019] 103 TAXMANN.COM 270 (DELHI TRIB.) IN THE ITAT DELHI BENCH G SAMSUSNG HEAVY INDUSTRIES CO. LTD., VS. ADIT, 9INTERNATIONAL TAXATION) DEHRADUN* SECTION .2 OF THE INCOME-TAX ACT, 1961, READ WITH ART ICLE 5 OF THE DT AA BETWEEN INDIA AND SOUTH KOREA - INCOME - DEEMED TO ACCRUE OR ARISE IN INDIA (PERMANENT ESTABLISHMENT - PROJECT OFF ICE/BRANCH OFFICE) - ASSESSMENT YEAR 2009-10 - ASSESSEE A COMPANY INCORP ORATED IN SOUTH KOREA WAS ENGAGED IN BUSINESS OF HEAVY ENGINEER ING - IT WAS AWARDED VASAI EAST DEVELOPMENT PROJECT BY ONGC FOR PUR POSE OF SURVEY DESIGN, ETC. - ASSESSEE CARRIED OUT CO- ORDINATION AND COMMUNICATION ACTIVITIES IN INDIA WH EREAS DESIGN AND ENGINEERING ACTIVITIES WERE PERFORMED IN MALAYSIA - FURTHER, ON ARRIVAL OF GOODS FROM MALAYSIA TO INDIA INSTALLATION AND CO MMISSIONING ACTIVITIES WERE CARRIED OUT IN INDIA - IN PURSUANCE TO ABOVE CONTRA CT ONGC ASKED ASSESSEE TO OPEN A PROJECT OFFICE IN MUMBAI FOR PU RPOSE OF CO- ORDINATION AND COMMUNICATION BETWEEN PARTIES TO CON TRACT - ASSESSEE RECRUITED TWO EMPLOYEES FOR SAID PURPOSE - IN COURSE OF ASSESSMENT, ASSESSIN G OFFICER HELD THAT INCOME EARNED BY ASSESSEE OUTSIDE INDIA WERE A TTRIBUTABLE TO PERMANENT ESTABLISHMENT IN INDIA BY WAY OF PROJECT OFFICE FOR CONTRACT - IT WAS NOTED THAT ISSUE AS TO WHETHER THERE WAS ANY PERMANENT ESTABLISHMENT OF ASSESSEE IN INDIA OR NOT HAD BEEN EXAMINED IN CASE OF ASSESSEE WITH RESPECT TO S AME CONTRACT BY CO-ORDINATE BENCH IN EARLIER YEARS WHEREIN IT WAS H ELD THAT ASSESSEE HAD A PERMANENT ESTABLISHMENT IN INDIA AND ACTIVITI ES CARRIED ON TO EXTENT OF PROJECT OFFICE OF ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 7 ASSESSEE WERE REQUIRED TO BE ATTRIBUTED AS INCOME A CCRUING AND ARISING TO ASSESSEE IN INDIA - WHETHER IN VIEW OF A FORESAID ORDER OF CO-ORDINATE BENCH OF TRIBUNAL, IMPUGNED ORDER PASSE D BY ASSESSING OFFICER DID NOT REQUIRE ANY INTERFERENCE - HELD, YE S [PARAS 17 AND 18] [IN FAVOUR OF REVENUE] [2014] 45 TAXMANN.COM 112 (MUMBAI TRIB.) IN THE ITAT MUMBAI BENCH L RENOIR CONSULTING LTD. VS. DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) 2 (1)* IT/I LT: WHERE THERE WAS SOME PLACE AT DISPOSAL OF ASSESSEE A NON- RESIDENT COMPANY REGISTERED IN MAURITIUS OR ITS EMP LOYEES DURING ENTIRE PERIOD OF STAY IN INDIA FOR RENDERING EXTENS IVE SERVICES TO INDIAN COMPANY, IT CONSTITUTED PE IN INDIA UNDER INDIA-MAURI TIUS DTAA SECTION 9 OF THE INCOME-TAX ACT, 1961, READ WITH ARTICLE 5 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AN D MAURITIUS - INCOME - DEEMED TO ACCRUE OR ARISE IN INDIA ( PERMANENT ESTABLISHMENT ) - ASSESSMENT YEARS 1997-98 AND 1999-2000 - ASSESSEE WAS A NON-RESIDENT COMPANY REGISTERED IN MA URITIUS - ASSESSMENT WAS MADE WHICH INCLUDED INCOME RECEIVED F ROM, AN INDIAN COMPANY, ON CONTRACTS EXECUTED IN INDIA, AS BUSINESS INCOME - ASSESSEE CONTENDED THAT IT DID NOT HAVE A PERMANENT ESTABLISHMENT IN INDIA SO INCOME QUA SAID BUSINESS WITH INDIAN COMPANY, THOUGH ADMITTEDLY CARRIED ON BY IT, COULD NOT BE BROUGHT T O TAX IN INDIA - WHETHER REGULAR INTERACTION BETWEEN PARTIES REQUIRI NG ASSESSEE'S CONTINUED PRESENCE IN INDIA OVER INDEFINITE CONTRAC T PERIOD WAS NEEDED FOR IMPLEMENTATION OF PROJECT - HELD, YES - WHETHER EXECUTION OF PROJECT APPEARED TO BE A REGULAR BUSINESS FUNCTI ON, CARRIED OUT IN ORDINARY COURSE, REQUIRING LITTLE INTERVENTION BY T OP MANAGEMENT - HELD, YES - WHETHER A FIXED PLACE OF BUSINESS, WOUL D NOT BE CONFINED TO A PLACE WHERE TOP MANAGEMENT OF COMPANY WAS LOCA TED AND BRANCH OF AN ENTERPRISES MAY WELL BE ITS PE; ONLY PRO FIT ATTRIBUTABLE TO SAME BEING LIABLE TO BE TAXED IN SOURCE STATE - HELD , YES - WHETHER IT WAS FOR ASSESSEE TO SPECIFY PLACE/S FROM WHERE THEY HAD FUNCTIONED OVER THEIR CONTINUED STAY IN INDIA - HELD, YES - WHETHER SOME PLACE AT DISPOSAL OF ASSESSEE OR ITS EMPLOYEES DURING ENTIRE PERIOD O F STAY IN INDIA, WAS MANIFEST AND EMINENT AND FOLLOWED UNMISTAKABLY FROM WORK NATURE/PROFILE AND MODUS OPERANDI FOLLOWED - HELD, YES - WHETHER IN VIEW OF ABOVE FACTS IT WOULD BE CLEAR THAT ASSESSEE HAD A PE IN INDIA DURING RELEV ANT YEARS - HELD, YES [ PARAS 4.6 & 4.8 ] [IN FAVOUR OF REVENUE] 3. LEARNED AUTHORIZED REPRESENTATIVE TOOK US TO THI S TRIBUNALS CONSOLIDATED ORDER IN ASSESSMENT YEAR(S) 2005-06 AND 2007-08 INVOLVING ITA NO. 1489/KOL/2011 AND 2082/KOL/2010 DECIDED ON 06.04.2016 AND IS ASSESSEE S MISCELLANEOUS APPLICATION NO. 39 AND 40/KOL/2017 FILED THEREIN DECIDING THE INSTANT ISSUE AS FOLLOW S:- THESE ARE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE U/S.254(2) OF THE INCOME TAX ACT, 1961 (ACT) PRAYING FOR RECTIFICATIO N OF CERTAIN APPARENT ERRORS IN THE COMMON ORDER DATED 6.4.2016 OF THE TRIBUNAL IN ITA NOS.1489/KOL/2011 AND 2082/KOL/2010 RELATING TO AY 2005-06 & 2006-07 RESPECTIVELY. 2. GIFFORD & PARTNER LTD. ('GIFFORD' OR ' THE ASSESSEE ') HAD ENTERED INTO A CONTRACT WITH GARDEN REACH SHIPBUILDING ENGINEERS (' GRSE ') IN INDIA FOR RENDERING THE FOLLOWING SERVICES WITH REGARD TO MODERNISATION OF THE EXISTI NG SHIPYARD OF GRSE:- PREPARATION OF CONCEPT PAPERS, PRELIMINARY PROJECT REPORT (PPR) ; DETAILED PROJECT REPORT (DPR); ENGINEERING SERVICES; PROJECT MANAGEMENT SERVICES; AND POST - CONSTRUCTION SERVICE ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 8 THE SAID SERVICES WERE TO BE PERFORMED BOTH FROM INDIA AS WELL AS FROM THE UNITED KINGDOM (' UK '). THE LOCAL SERVICES WERE RENDERED THROUGH INDEPENDENT INDIAN SUBCONTRACTORS AND THE FOREIGN S ERVICES WERE RENDERED PARTLY BY AN INDEPENDENT FOREIGN SUBCONTRACTOR I.E. APPLEDORE AND PARTLY BY THE ASSESSEE, FROM ITS HEAD OFFICE IN THE UK. FEES FOR THE SAID SERVICES WERE PAYABLE IN TWO PA RTS I.E. FOREIGN CURRENCY PAYMENT IN USD AND LOCAL CURRENCY PAYMENTS IN INR. THE WORK ON THE SAID CONTRACT WAS STARTED IN APRI L 2004 AND THE ASSESSEE HAS SINCE BEEN FILING TAX RETURNS IN INDIA FOR INCO MES EARNED FROM THE SAID CONTRACT. 2. THE ISSUES THAT AROSE FOR CONSIDERATION IN THE A FORESAID APPEALS WAS REGARDING TAXABILITY IN INDIA OF THE SUMS RECEIVED FROM GRSE FOR SERVICES RENDERED UNDER THE CONTRACT REFERRED TO IN THE EARLIER PARAGRAPH. 3. BY A COMMON ORDER DATED 6.4.2016 THE TRIBUNAL HELD THAT THE SUMS RECEIVED FROM GRSE ACCRUED AND AROSE IN INDIA AND THAT THE SAME I S TAXABLE IN INDIA AS FEES FOR TECHNICAL SERVICES (FTS). THE TRIBUNAL FURTHER HELD THAT FTS HAS TO BE TAXED UNDER ARTICLE 13(2) OF THE DTAA BETWEEN INDIA AND UK. THE RELEVANT CLAUSES OF THE DTAA PROVIDES AS FOLLOWS: ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICE S 1. ROYALTIES AND FEES FOR TECHNICAL SERVICES ARISIN G IN A CONTRACTING STATE AND PAID TO A RESIDENT OF THE OTHER CONTRACTING STATE M AY BE TAXED IN THAT OTHER STATE. 2. HOWEVER, SUCH ROYALTIES AND FEES FOR TECHNICAL S ERVICES MAY ALSO BE TAXED IN THE CONTRACTING STATE IN WHICH THEY ARISE AND AC CORDING TO THE LAW OF THAT STATE; BUT IF THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES IS A RESIDENT OF THE OTHER CONTRACTING STATE, THE T AX SO CHARGED SHALL NOT EXCEED : (A)IN THE CASE OF ROYALTIES WITHIN PARAGRAPH 3(A) O F THIS ARTICLES, AND FEES FOR TECHNICAL SERVICES WITHIN PARAGRAPHS 4 (A) AND (C) OF THIS ARTICLE (I)DURING THE FIRST FIVE YEARS FOR WHICH THIS CONVE NTION HAS EFFECT ; (AA) 15 PER CENT OF THE GROSS AMOUNT OF SUCH ROYALT IES OR FEES FOR TECHNICAL SERVICES WHEN THE PAYER OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES IS THE GOVERNMENT OF THE FIRST MENTIONED C ONTRACTING STATE OR A POLITICAL SUB- DIVISION OF THAT STATE, AND (BB) 20 PER CENT OF THE GROSS AMOUNT OF SUCH ROYALT IES OR FEES FOR TECHNICAL SERVICES IN ALL OTHER CASES; AND (II) DURING SUBSEQUENT YEARS, 15 PER CENT OF THE GR OSS AMOUNT OF SUCH ROYALTIES OR FEES FOR TECHNICAL SERVICES; AND 4. THE TRIBUNAL THEREAFTER CONCLUDED THAT FTS HAS T O BE TAXED IN INDIA AS PER ARTICLE 13(2) OF THE DTAA BUT AS PER THE PROVISIONS CONTAIN ED IN THE INCOME TAX ACT, 1961 (ACT). THE FOLLOWING WERE THE FINDINGS OF THE TRIBU NAL IN PARAGRAPH 55 OF ITS ORDER: ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 9 55. WE HAVE ALREADY SEEN CLAUSE 3.10 OF THE AGREEME NT BETWEEN THE ASSESSEE AND GRSE (SEE PARA-47 OF THIS ORDER) WHICH PROVIDES THA T ALL PLANS, DRAWINGS, SPECIFICATIONS, DESIGNS, REPORTS AND OTHER DOCUMENT S PREPARED BY THE CONSULTANT IN PERFORMING THE SERVICES SHALL BECOME AND REMAIN THE EXCLUSIVE PROPERTY OF GRSE. WE ARE THEREFORE OF THE VIEW THAT THE REQUIREMENTS OF CLAUSE (C) OF ARTICLE 13(4) OF THE DTAA ARE ALSO SATISFIED IN THE PRESENT CASE AND THE REFORE THE SOURCE COUNTRY (INDIA) HAS A RIGHT TO TAX THE FEE IN QUESTION IN ACCORDANC E WITH ARTICLE 13(2) OF THE DTAA BUT SUBJECT TO THE LIMITATION OF RATE OF TAX AS LAID DO WN IN ARTICLE 13(2). THE PROVISIONS OF THE ACT IN THIS REGARD ARE CONTAINED IN SEC.115A OF THE ACT..... 5. IN PARAGRAPH 72 & 73, THE TRIBUNAL CONCLUDED ON THE ISSUE OF TAXABILITY OF FTS AS FOLLOWS: 72 . HAVING COME TO THE CONCLUSION THAT THERE WAS NO P E OF THE ASSESSEE IN INDIA DURING THE RELEVANT PREVIOUS YEAR, THE QUESTI ON THAT WOULD NOW REQUIRE CONSIDERATION IS WITH REGARD TO TAXABILITY OF THE F TS UNDER ARTICLE 13(2) OF THE TREATY. A READING OF ARTICLE 13(2) OF THE DTAA ( REPRODUCED IN THE EARLIER PART OF THIS ORDER ) WOULD SHOW THAT TAXATION HAS TO BE IN ACCORDING W ITH THE ACT. THE PROVISIONS CONTAINED IN THE ACT IN THIS REGARD ARE SEC.115A OF THE ACT. IN THIS REGARD, THE RELEVANT PROVISIONS OF SECTION 115 A OF THE ACT, NEEDS TO BE LOOKED INTO. WE HAVE ALREADY REPRODUCED THE PROVISI ONS OF SEC.115A OF THE ACT AND SEC.44AD OF THE ACT IN THE EARLIER PART OF THIS ORDER. U/S.115A OF THE ACT, INCOME BY WAY OF FTS RECEIVED BY A NON RESIDEN T WOULD BE TAXED AT 20% ON GROSS BASIS ONLY IF ALL THE FOLLOWING CONDITIONS ARE SATISFIED:- I) THE INCOME IS RECEIVED FROM GOVERNMENT OR AN IND IAN CONCERN IN PURSUANCE OF AN AGREEMENT; II) SUCH AGREEMENT WAS MADE AFTER 31ST DAY OF MAY, 1997 BUT BEFORE THE 1ST DAY OF JUNE, 2005; AND III) SUCH INCOME DOES NOT FALL WITHIN THE PURVIEW O F SUB-SECTION (1) OF SECTION 44DA OF THE ACT. 73 . WE HAVE ALREADY SEEN THAT THE ASSESSEE IN THE PRE SENT CASE INSTANT CASE, THERE IS NO DOUBT THAT THE ASSESSEE FULFILLS CONDIT ION (I) AND CONDITION (II) AS MENTIONED ABOVE. AS REGARDS CONDITION NO. (III), TH E PROVISIONS OF SUB-SECTION (1) OF SECTION 44DA OF THE ACT, FTS WOULD FALL WITH IN THE PURVIEW OF SECTION 44DA(1) OF THE ACT, ONLY IF IT IS ACTIVELY CONNECTE D TO THE PE OF THE NON- RESIDENT IN INDIA. PE FOR THE PURPOSE OF THIS SECTI ON HAS BEEN DEFINED IN SECTION 92F(IIIA) OF THE ACT WHICH READS AS UNDER:- '( IIIA ) ' PERMANENT ESTABLISHMENT ', REFERRED TO IN CLAUSE (III), INCLUDES A FIXED PLACE OF BUSINESS THROUGH WHICH THE BUSINES S OF THE ENTERPRISE IS WHOLLY OR PARTLY CARRIED ON;' WE HAVE IN THE EARLIER PARAGRAPHS ALREADY HELD THAT THERE WAS NO PE IN INDI IN THE FORM OF FIXED PLACE OF BUSINESS THROUGH WHICH THE B USINESS OF THE ASSESSEE WAS WHOLLY OR PARTLY CARRIED ON IN INDIA. AS SUCH, THE ASSESSEE WOULD BE ENTITLED TO THE BENEFIT OF THE PROVISIONS OF SECTION 115A OF THE AC T AND BE TAXED AT 20% OF THE GROSS RECEIPTS. WE ALSO HOLD THAT TAX LIABILITY BORNE BY GRSE WILL ALSO NEED TO BE GROSSED UP FOR ARRIVING AT GROSS RECEIPTS OF THE ASSESSEE A ND AFTER SUCH GROSSING UP SUCH RECEIPTS HAVE TO BE TAXED AT 20%. WE HOLD ACCORDING LY. ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 10 6. IN THIS MAS, IT HAS BEEN SUBMITTED BY THE ASSESS EE. THAT AS TO THE PROVISIONS OF SECTION 90(2) OF THE ACT, THE PROVISION OF DOMESTIC LAW OR DTAA WHICHEVER IS BENEFICIAL IS APPLICABLE TO THE NON-RESIDENT ASSESS EE. IT IS THE PLEA OF THE ASSESSEE THAT U/S 5 115A OF THE ACT FTS IS CHARGEABLE TO TAX @ 20% ON THE BASIS OF THE GROSS RECEIPTS, WHEREAS AS PER THE PROVISION OF ARTICLE 1 3(2)(BB)(II) FTS IS TAXABLE @ 15% OF THE GROSS AMOUNT OF SUCH FTS. IT IS THE STAND OF THE ASSESSEE THAT SINCE THE PROVISIONS OF THE DTAA ARE MORE BENEFICIAL, THE TRI BUNAL OUGHT TO HAVE DIRECTED THAT TAX SHOULD BE LEVIED IN ACCORDANCE WITH THE PROVISI ON OF DTAA RATHER THAN THE PROVISION OF SECTION 115A OF THE ACT. IT IS NOT IN DISPUTE THAT ASSESSMENT ORDER FOR A.Y.2005-06 AND 2007-08 WAS BEYOND THE PERIOD OF FI VE YEARS FOR WHICH THE CONVENTION BETWEEN INDIA AND U.K CAME INTO EFFECT A ND THEREFORE ARTICLE 13(2)(BB)(II) WOULD ALONE APPLY IN THE PRESENT CASE. 7. WHEN THIS MISCELLANEOUS APPLICATION WAS TAKEN UP FOR CONSIDERATION IT WAS NOTICED THAT THE MISCELLANEOUS APPLICATION WAS FILED ON 17. 03.2017 WHEREAS THE ORDER OF THE TRIBUNAL WAS PASSED ON 06.04.2016. AS PER THE PROVI SION OF SECTION 254(2) OF THE ACT AS AMENDED BY THE FINANCE ACT, 2016 W.E.F. 01.06.20 16 AN APPLICATION FOR RECTIFICATION OF APPARENT ERRORS IN THE ORDER OF TH E TRIBUNAL HAS TO BE FILED WITHIN SIX MONTHS FROM THE END OF THE MONTHS IN WHICH THE ORDE R WAS PASSED. PRIOR TO THE AFORESAID AMENDMENT, AN APPLICATION FOR RECTIFICATI ON OF MISTAKE APPARENT ON THE RECORD COULD BE FILED AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF THE ORDER. SINCE THE PRESENT MISCELLANEOUS APPLICATION HAS BEEN FILE D AFTER THE AFORESAID STATUTORY AMENDMENT BY THE FINANCE ACT, 2016, A QUESTION THAT WAS RAISED WAS AS TO WHETHER THE MAS WOULD BE BARRED BY TIME UNDER THE AMENDED PROVISION OF LAW. 8. ON THIS ASPECT AFTER CONSIDERING THE RIVAL SUBMI SSIONS WE CONCLUDE AS FOLLOWS:- SECTION 254(2) OF THE ACT OF 1961 PRIOR TO THE AMEN DMENT BY THE FINANCE ACT, 2016 W.E.F.1.6.2016 READS AS UNDER:- 254(2) THE APPELLATE TRIBUNAL MAY, AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF THE ORDER, WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FRO M THE RECORD, AMEND ANY ORDER PASSED BY IT UNDER SUB-SECT ION (1), AND SHALL MAKE SUCH AMENDMENT IF THE MISTAKE IS BROUGHT TO ITS NOT ICE BY THE ASSESSEE OR THE ASSESSING OFFICER: PROVIDED THAT AN AMENDMENT WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A REFUND OR OTH ERWISE INCREASING THE LIABILITY OF THE ASSESSEE, SHALL NOT BE MADE UNDER THIS SUB-SECTION UNLESS THE APPELLATE TRIBUNAL HAS GIVEN NOTICE TO THE ASSESSEE OF ITS INTENTION TO DO SO AND HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNI TY OF BEING HEARD AFTER THE AMENDMENT BY THE FINANCE ACT, 2016, W.E.F . 1.6.2016, SEC.254(2) READ AS UNDER: 254(2) THE APPELLATE TRIBUNAL MAY, AT ANY TIME WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS PASSED , WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD, AM END ANY ORDER PASSED BY IT UNDER SUB-SECTION (1), AND SHALL MAKE SUCH AMEND MENT IF THE MISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE ASSESS ING OFFICER: IT CAN BE SEEN FROM THE AFORESAID AMENDMENT THAT TH E TIME LIMIT FOR FILING MISCELLANEOUS APPLICATION U/S.254(2) HAS BEEN CURTA ILED TO 6 MONTHS FROM THE DATE OF THE PASSING OF THE ORDER FROM A PERIOD OF 4 YEARS F ROM THE DATE OF THE ORDER. 9. THE ADMITTED FACTS IN THE PRESENT M.A. ARE THAT THE ORDER AGAINST WHICH THE PRESENT M.A. IS BEING FILED WAS PASSED PRIOR TO 1.6.2016 AN D THE APPLICATION U/S.254(2) IN RESPECT OF SUCH ORDER IS FILED AFTER 1.6.2016. THE QUESTION BEFORE US IS AS TO WHETHER ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 11 IN RESPECT OF ORDERS PASSED PRIOR TO 1.6.2016 AND W HERE M.A. U/S.254(2) IN RESPECT OF SUCH ORDERS IS FILED AFTER 1.6.2016, WHETHER THE TI ME LIMIT PRESCRIBED U/S.254(2) PRIOR TO THE AMENDMENT BY FINANCE ACT, 2016 SHOULD APPLY OR THE TIME LIMIT PRESCRIBED AFTER THE AMENDMENT BY FINANCE ACT, 2016 SHOULD APP LY? 10. THE HONBLE M.P.HIGH COURT IN WRIT PETITION NO. 4144/2017 IN THE CASE OF DISTRICT CENTRAL CO-OP. BANK LTD., RAISEN VS. UNION OF INDIA VIDE ITS JUDGMENT DATED 09TH OCTOBER, 2017 HAD TO DEAL WITH AN IDENTICAL CASE SU CH AS THE ASSESSEE. THE HONBLE COURT RELIED ON THE DECISION OF THE APEX COURT IN T HE CASE OF M. P. STEEL CORPORATION VS. COMMISSIONER OF CENTRAL EXCISE REPORTED IN (201 5) 7 SCC 58 WHEREIN IT WAS HELD THAT THOUGH PERIODS OF LIMITATION, BEING PROCEDURAL LAW, ARE TO BE APPLIED RETROSPECTIVELY, YET IF A SHORTER PERIOD OF LIMITAT ION IS PROVIDED BY A LATER AMENDMENT TO A STATUTE, SUCH PERIOD WOULD RENDER THE VESTED R IGHT OF ACTION CONTAINED IN THE STATUTE NUGATORY AS SUCH RIGHT OF ACTION WOULD NOW BECOME TIME BARRED UNDER THE AMENDED PROVISION. THEREFORE A STATUTE WHICH WHILE PROCEDURAL IN ITS CHARACTER, IF IT AFFECTS VESTED RIGHTS ADVERSELY IT HAS TO BE CONSTR UED AS PROSPECTIVE. FOLLOWING THE AFORESAID VIEW, THE HONBLE M.P.HIGH COURT HELD AS FOLLOWS: 08 . KEEPING IN VIEW THE JUDGMENT REFERRED BY THEIR LO RDSHIPS IN THE AFORESAID CASE AND THE JUDGMENT DELIVERED BY THEIR LORDSHIPS IN THE M.P. STEEL CORPORATION (SUPRA), IN THE PRESENT CASE ALSO THE N EW LAW OF LIMITATION PROVIDING A SHORTER PERIOD CANNOT CERTAINLY EXTINGU ISH A VESTED RIGHT OF ACTION. 09 . THE AMENDMENT HAS BEEN MADE EFFECTIVE VIRTUALLY I N CASE OF ASSESSEE WITH RETROSPECTIVE EFFECT THOUGH THE AMENDMENT DOES NOT SHOW THAT IT IS APPLICABLE WITH RETROSPECTIVE EFFECT, HOWEVER, THE EXISTING RIGHT HAS BEEN EXTINGUISHED WITH RETROSPECTIVE EFFECT IN CASE OF T HE ASSESSEE. 10 . IN THE CONSIDERED OPINION OF THIS COURT, THE LEGI SLATURE SHOULD HAVE GRANTED SOME TIME TO THE ASSESSEES WHO COULD HAVE F ILED AN APPEAL WITHIN A PERIOD OF FOUR YEARS AND THE SAME HAS NOT BEEN DONE TILL THE AMENDMENT CAME INTO FORCE EXTINGUISHING THE RIGHT TO FILE AN APPEAL. 11 . IN THE CONSIDERED OPINION OF THIS COURT, APPLICAT ION PREFERRED BY THE ASSESSEE SHOULD NOT HAVE BEEN DISMISSED BY THE TRIB UNAL ON ACCOUNT OF THE AMENDMENT WHICH HAS REDUCED THE PERIOD OF LIMITATIO N OF FOUR YEARS TO SIX MONTHS. 12- RESULTANTLY, THE IMPUGNED ORDER PASSED BY THE RESPONDENT ON 23/12/2016 IS HEREBY QUASHED AND THE WRIT PETITION STANDS ALLOWED. THE INCOME TAX APPELLATE TRIBUNAL IS DIRECTED TO DECIDE THE APPLICATION PREFERRED UNDER SECTION 254(2) ON MERITS WITHIN A PERIOD OF T HREE MONTHS FROM THE DATE OF RECEIPT OF CERTIFIED COPY OF THIS ORDER. THE PAR TIES SHALL APPEAR BEFORE THE TRIBUNAL ON 30TH OF OCTOBER, 2017. 11. FOLLOWING THE AFORESAID DECISION, WE HAVE TO HO LD THAT THE PRESENT MA THOUGH FILED AFTER 1.6.2016 WILL CONTINUE TO BE GOVERNED B Y THE LAW OF LIMITATION LAID DOWN U/S.254(2) ON THE DATE WHEN THE ORDER AGAINST WHICH THE MA IS SOUGHT TO BE FILED WAS PASSED AND NOT LAW AS PER THE LAW AS AMENDED BY THE AMENDMENT W.E.F. 1.6.2016. THE MA THEREFORE HAS TO BE CONSTRUED AS ONE FILED W ITHIN THE PERIOD OF LIMITATION AND HAS TO BE ACCEPTED AS VALIDLY PRESENTED WITHIN THE PERIOD OF LIMITATION. THE OBJECTION OF THE REGISTRY IS THEREFORE HELD TO BE NOT IN ACCO RDANCE WITH LAW. 12. THOUGH THE LD. DR MADE SUBMISSIONS BY PLACING R ELIANCE ON THE CBDT CIRCULAR NO.3/2017 BY POINTING OUT THAT THE HONBLE MADHYA PTRADESH H IGH COURT IN THE AFORESAID DECISION HAS NOT CONSIDERED THE EFFECT OF THE CBDT CIRCULAR, WE ARE OF THE VIEW THAT IT WOULD NOT BE APPROPRIATE TO ADVANCE AR GUMENTS ON THE CORRECTNESS OF THE ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 12 DECISION OF THE HONBLE HIGH COURT TO WHICH TRIBUNA L IS SUBORDINATE. WE THEREFORE DEEM IT NOT NECESSARY TO DEAL WITH THE OBJECTIONS O F THE LD. DR IN THIS REGARD. 13. AS FAR AS THE MERITS OF THE MISCELLANEOUS APPLI CATION FILED BY THE ASSESSEE IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED THE SUBMISSIONS AS WERE MADE IN THE MISCELLANEOUS APPLICATION. 14. THE LD. DR SUBMITTED THAT THE MISTAKE POINTED O UT BY THE ASSESSEE IN THESE MISCELLANEOUS APPLICATIONS CANNOT BE SAID TO BE A M ISTAKE APPARENT FROM THE RECORD. IN THIS REGARD THE LD. DR DREW OUR ATTENTION TO THE VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL WHICH WERE AS FOLL OWS : GROUNDS OF APPEAL THE GROUNDS STATED HERE UNDER ARE INDEPENDENT OF, AND WITHOUT PREJUDICE, TO ONE ANOTHER. I FOR THAT THE ASSESSING OFFICER AND THE DISPUTE RE SOLUTION PANEL ( HEREINAFTER REFERRED TO AS THE AUTHORITIES BELOW) E RRED IN HOLDING THAT THE APPELLANT IS HAVING A PERMANENT ESTABLISHMENT('PE'} IN INDIA IN TERMS OF DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA A ND UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND (' DTAA '). II WITHOUT PREJUDICE TO THE GROUND NO. 1, THE APPEL LANT STATES AND SUBMITS THAT THE AUTHORITIES BELOW ERRED IN HOLDING THAT, T HE ENTIRE AMOUNT RECEIVED BY THE APPELLANT, INCLUDING THOSE IN UNITED STATES DOL LAR ( 'USD '}WAS ATTRIBUTABLE TO THE ALLEGED PE IN INDIA AND TAXABLE UNDER SECTIO N 44DA OF THE INCOME TAX ACT, 1961. ( THE 'ACT ').; III FOR THAT THE AUTHORITIES BELOW ERRED THAT ANY I NCOME NOT ATTRIBUTABLE TO THE ACTIVITIES PERFORMED IN INDIA CAN BE CHARGED TO TAX IN INDIA OR FOR ANY REASON ALLEGED OR AT ALL; IV FOR THAT THE AUTHORITIES BELOW ERRED IN HOLDING THAT THE APPELLANT'S CLAIMS THAT THAT IT DID NOT HAVE ANY PE IN INDIA OR THAT T HE INCOME EARNED IN RESPECT OF ACTIVITIES OUTSIDE INDIA IN USD WAS NOT ASSESSAB LE IN INDIA, COULD NOT BE ENTERTAINED WITHOUT FILING A REVISED RETURN. V FOR THAT THE AUTHORITIES BELOW ERRED IN DISALLOWI NG RS 3,136,682 PAID TO M/S APPLEDORE INTERNATIONAL LTD FOR WORKS CARRIED OUT B Y THEM IN THE UNITED KINGDOM ON THE GROUND THAT THE SAME WAS TAXABLE IN INDIA AND TAX WAS REQUIRED TO BE DEDUCTED THEREON UNDER SECTION 195 O F THE ACT. THE REASONS GIVEN FOR SUCH DISALLOWANCE ARE NOT SUSTAINABLE ON FACTS AND LAW; VII FOR THAT THE AUTHORITIES BELOW ERRED IN DISALLO WING A SUM OF RS 2,858,996 ON THE GROUND OF DELAYED DEPOSIT OF TAX DEDUCTED AT SOURCE; VIII FOR THAT THE AUTHORITIES BELOW ERRED IN HOLDIN G THAT A SUM OF RS 3,733,151 WAS TO BE ADDED TO THE INCOME ON ACCOUNT OF GROSSIN G UP; IX FOR THAT THE AUTHORITIES BELOW ERRED IN HOLDING THAT ANY INTEREST COULD BE CHARGED UNDER SECTION 234B AND/OR 234C OF THE ACT. 15. ACCORDING TO HIM THE ASSESSEE HAS NOT RAISED AN Y GROUND WITH REGARD TO ANY RATE OF TAX AND THEREFORE THE ASSESSEE CANNOT BE PERMITT ED TO RAISE THIS PLEA IN THE ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 13 MISCELLANEOUS APPLICATION. IN THIS REGARD OUR ATTEN TION WAS DRAWN BY THE LD. DR TO THE FOLLOWING DECISION : I) TOKHEM ENTERPRISES V. INCOME-TAX OFFICER, WARD 2 0(3)(1), MUMBAI, REPORTED IN [2011] 132 ITD 375 (MUMBAI )/[2012] 144 TTJ 256 (MUMBAI) II) VYLINE GLASS WORKS LTD. V. ASSISTANT COMMISSION ER OF WEALTH-TAX, CO. CIRCLEIII(4), CHENNAI REPORTED IN [2015] 231 TAXMAN 535 (MADRAS)/[2015] 373 ITR 355 (MADRAS)/[2015]281 CTR 317 (MADRAS). 16. IN THE AFORESAID DECISION IT WAS HELD THAT IN A MISCELLANEOUS APPLICATION NEW GROUND NOT SET FORTH IN THE MEMORANDUM OF THE APPEA L OR IN THE ADDITIONAL GROUNDS CANNOT BE TAKEN. SIMILAR RULING RENDERED BY THE HON BLE CALCUTTA HIGH COURT IN THE FOLLOWING CASES WERE BROUGHT TO OUR NOTICE: I) SUMAN TEA AND PLYWOOD INDUSTRIES REPORTED IN 226 ITR 34(CAL) II) GOKUL CHAND AGARWAL (202 ITR 14) III) PR. COMMISSIONER OF INCOME TAX, SURAT-1 VS. GO MTI SILK MILLS LTD. IN SPECIAL CIVIL APPLICATION NO.15301 OF 2017 AND SPECIAL CIVIL APPLICATION NO.15302 OF 2017 DATED AUGUST 29, 2017 AND REPORTED IN 2017-TIOL-1768- HC-AHMIT. 17. HIS NEXT SUBMISSION WAS THAT THE POWER TO RECTI FY A MISTAKE U/S 254(2) OF THE ACT IS RESTRICTED TO ONLY TO RECTIFY A MISTAKE APPARENT ON THE FACE OF THE RECORD. IF THE ISSUE SOUGHT TO BE AGITATED IN A MISCELLANEOUS APPLICATIO N INVOLVES DEBATABLE ISSUES WHICH INVOLVES LONG DRAWN PROCESS OF REASONING, THEN IT C ANNOT BE SAID THAT THERE IS A MISTAKE APPARENT ON THE FACE OF THE RECORD. IN SUPP ORT OF THE ABOVE PROPOSITION THE FOLLOWING DECISION WERE BROUGHT TO OUR NOTICE: I) HONBLE SUPREME COURT IN THE CASE OF DEVA MITAL POWDERS PVT. LTD. VS COMMISSIONER OF TRADE TAX, U.P. IN CIVIL APPEAL NO. 5607 OF 2007. II) MARUTI INSURANCE DISTRIBUTION SERVICES LTD REPO RTED IN 212 TAXMANN 123 (DELHI). 18. THE LD. DR ALSO BROUGHT TO OUR NOTICE THAT THE TRIBUNAL HAS DEALT WITH THE CONTENTIONS OF THE ASSESSEE ON THE TAXABILITY OF FT S BEFORE THE AO AND THE DRP AS WELL AS BEFORE THE TRIBUNAL AND IN ALL THESE SUBMIS SIONS MADE BY THE ASSESSEE, THE ISSUE WITH REGARD TO THE TAXABILITY OF FTS AT A CON CESSIONAL RATE OF 15% AS PER ARTICLE 13(2) OR DTAA AS AGAINST THE HIGHER RATE OF 20% OF GROSS RECEIPTS U/S 115A OF THE ACT WAS NEVER RAISED BY THE ASSESSEE. IT WAS THE CONTEN TION OF THE LD. DR THAT IN THE GARB OF THE MISCELLANEOUS APPLICATION, THE ASSESSEE SEEK S TO REVIEW OF THE ORDER OF THE TRIBUNAL. FOR THE ABOVE REASONS THE LD. DR PRAYED T HAT THE MISCELLANEOUS APPLICATIONS ARE WITHOUT ANY MERITS AND THE SAME SHOULD BE DISMISSED . 19. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO T HE RIVAL SUBMISSION. AT THE OUTSET, WE NOTICE THAT IN THE SYNOPSIS OF THE ARGUMENTS FIL ED BY THE ASSESSEE ON 12.12.2012 IN PARA 2.5 , THE ASSESSEE HAS TAKEN A SPECIFIC PLE A THAT FTS HAS TO BE TAXED AT A CONCESSIONAL RATE OF 15% OF THE GROSS RECEIPTS AS P ER THE PROVISION OF ARTICLE 13(2) OF THE DTAA AS AGAINST HIGHER RATE OF TAX PROVIDED AT 20% OF GROSS RECEIPTS U/S 115A OF THE ACT. THE LAW IS WELL SETTLED THAT THE POWERS OF THE TRIBUNAL U/S 254(1) OF THE ACT ARE VERY WIDE AND THEREFORE IN AN APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL COULD HAVE AND OUGHT TO HAVE CONSIDERED THE AFORESAID SUBMISSI ON OF THE ASSESSEE. THE FACT ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 14 THAT THERE IS NO SPECIFIC GROUND TAKEN BY THE ASSES SEE IN THIS REGARD IS IMMATERIAL BECAUSE THE RATE OF TAX TO BE APPLIED DOES NOT REQU IRE ANY ADJUDICATION OR FINDING TO BE GIVEN ON FACTS. IN OTHER WORDS, THE APPLICABILIT Y OF TAX COULD BE DECIDED ON THE BASIS OF FACTS AND MATERIAL ALREADY AVAILABLE ON RE CORD. IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ISSUE WITH REGARD TO RATE O F TAX WAS NOT THE SUBJECT MATTER OF THE APPEAL AT ALL, ESPECIALLY IN THE LIGHT OF THE S PECIFIC CONTENTION PUT FORTH BY THE ASSESSEE ON THIS ASPECT IN THE WRITTEN SUBMISSIONS DATED 12.12.2012. 20. IN THE PRESENT CASE THERE IS AN AGREEMENT BETWE EN INDIA AND U.K. FOR AVOIDANCE OF DOUBLE TAXATION AND THEREFORE THE ASSESSEE IS EN TITLED TO PLEAD THAT TAXABILITY HAS TO BE AS PER THE PROVISION OF THE ACT OR THE DTAA WHIC HEVER IS BENEFICIAL IS TO THE ASSESSEE. SINCE THE TAXABILITY OF FTS AT 15% OF THE GROSS RECEIPTS AS PER ARTICLE 13(2)(BB)(II) IS MORE FAVOURABLE THAN THE PROVISION OF SECTION 115A OF THE ACT, THE FTS IN QUESTION HAS TO BE TAXED AT 15% ON GROSS BASIS A S PER THE DTAA. WE ARE OF THE VIEW THAT THE MISTAKE POINTED OUT IN THE MISCELLANE OUS APPLICATIONS IS APPARENT IN THE FACE OF THE RECORD. EVEN ASSUMING THAT THE LONG DRA WN PROCESSING OF REASONING IS REQUIRED TO DECIDE THE MISCELLANEOUS APPLICATION BU T IF ULTIMATELY THERE CAN BE ONLY ONE POSSIBLE VIEW THEN IT CANNOT BE SAID THAT THE P OWER TO RECTIFY SUCH MISTAKE IS OUTSIDE THE AMBIT OF SECTION 254(2) OF THE ACT. THE LD. DRS ARGUMENTS THAT THE ASSESSEE IS SEEKING REVIEW OF THE ORDER OF THE TRIB UNAL IS NOT CORRECT. AS WE HAVE ALREADY STATED THAT THIS PLEA WAS ALREADY PUT FORTH IN THE SUBMISSIONS MADE BEFORE THE TRIBUNAL BUT WAS NOT CONSIDERED AND OMITTED TO BE CONSIDERED BY THE TRIBUNAL. FOR ALL THE ABOVE REASONS WE ACCEPT THE MISCELLANEOUS A PPLICATIONS FILED BY THE ASSESSEE. 21. THE ORDER OF THE TRIBUNAL IS AMENDED BY SUBSTIT UTING THE EXISTING PARAGRAPHS 72 & 73 OF THE ORDER OF THE TRIBUNAL FOR THE FOLLOWING PARAGRAPHS 72 & 73: ' 72 . HAVING COME TO THE CONCLUSION THAT THERE WAS NO P E OF THE ASSESSEE IN INDIA DURING THE RELEVANT PREVIOUS YEAR, THE QUESTI ON THAT WOULD NOW REQUIRE CONSIDERATION IS WITH REGARD TO TAXABILITY OF THE F TS. CONSIDERING THE FATS OF THE CASE, AS PER ARTICLE 13(2) OF THE INDIA-UK DTAA , FTS INCOME OF NON- RESIDENT IS TAXABLE @ 15% ON GROSS RECEIPTS. WHEREA S AS PER SECTION 115A OF THE ACT, FTS IS TAXABLE @ 20% ON GROSS RECEIPTS. 73 . SINCE, THE PROVISIONS OF THE INDIA-UK DTAA IS MOR E BENEFICIAL, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF THE PROVISIO NS OF SECTION 90(2) OF THE ACT. ACCORDINGLY, FTS IN THE GIVEN CASE WOULD BE TAXED A T THE BENEFICIAL RATE OF 15% ON GROSS RECEIPTS AS PROVIDED IN ARTICLE 13(2) OF THE INDIA-UK DTAA. WE ALSO HOLD THAT THE TAX LIABILITY BORNE BY GRSE WILL ALSO NE D TO BE GROSSED UP FOR ARRIVING AT GROSS RECEIPTS OF THE ASSESSEE AND AFTER SUCH GROSSING UP SUCH RECEIPTS HAVE TO BE TAXED @ 15%. WE HOLD ACCORDINGLY . 4. IT IS THEREFORE SUFFICIENTLY CLEAR THAT THE ASSE SSEE HAS SUCCEEDED ON THE VERY ISSUE INVOLVING IDENTICAL REVENUES PLEADINGS IN SA ID EARLIER ASSESSMENT YEAR(S). LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGU ES AT THIS STAGE THAT THE REVENUES APPEALS AGAINST THE SAME STAND ADMITTED I N HONBLE JURISDICTIONAL HIGH COURT AFTER FRAMING SUBSTANTIAL QUESTION OF LAW THEREIN. WE ADOPT JUDICIAL CONSISTENCY IN THESE CIRCUMSTANCES TO HOLD THAT THE CIT(A) HAS RIG HTLY FOLLOWED HIS EARLIER ORDER(S) IN ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 15 ASSESSEES CASES QUA THE PERMANENT ESTABLISHMENT ISSUE IN INDIA. IT IS MADE CLEAR THAT MERE ADMISSION OF APPEAL IN HONBLE JURISDICTIONAL H IGH COURT DOES NOT FORM SOLE SUBSTANTIVE REASON TO ADOPT A DIFFERENT APPROACH IN LATTER ASSESSMENT YEAR. THE REVENUE FAILS IN ITS IDENTICAL FIRST SUBSTANTIVE GR IEVANCE IN THESE THREE ASSESSMENT YEARS. 5. NEXT COMES SECOND IDENTICAL ISSUE AS TO WHETHER THE ASSESSEE OUGHT TO BE SUBJECTED TO SEC. 234B AND 234C INTEREST OR NOT. SU FFICE TO SAY, LEARNED CO-ORDINATE BENCHS ORDER IN ASSESSMENT YEAR 2009-10 HOLDS THAT THE ABOVE INTEREST PROVISIONS DO NOT APPLY IN CASE OF THE ASSESSEE BEING A NON-RESID ENT COMPANY. WE THEREFORE ADOPT THE VERY REASONING MUTATIS MUTANDIS TO DECLINE THE REVENUES INSTANT SUBSTANTIVE GRIEVANCE AS WELL. 6. LASTLY COMES THE REVENUES IDENTICAL ADDITIONAL SUBSTANTIVE GROUND THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THA T THE ASSESSEES PAYMENTS OF 2324295, 547413 & 4904444/- (ASSESSMENT YEAR-WISE) MADE TO M/S APPLED ORE INTERNATIONAL LTD. IN LIEU OF RENDERING TECHNICAL S ERVICES IN UK FORMING SUBJECT-MATTER OF 40(A)(IA)/ ANY DISALLOWANCE STOOD RENDERED INFR UCTUOUS IN VIEW OF THE FACT THAT IT DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. WE NOTICE HEREIN AS WELL THE TRIBUNALS EARLIER ORDER (SUPRA) HAS ALREADY CONCLU DED THAT THIS SEC. 40(A)(IA) DISALLOWANCE ISSUE STOOD RENDERED INFRUCTUOUS IN VI EW OF THE FACT THE SUM IN QUESTION HAS ALREADY BEEN ASSESSED AS FEE FOR TECHNICAL SERV ICES. THE REVENUE FAILS IN ITS IDENTICAL ADDITIONAL SUBSTANTIVE GRIEVANCE AS WELL. ALL OF THE THREE IDENTICAL SUBSTANTIVE GROUNDS RAISED AT REVENUES BEHEST FAIL THEREFORE. 7. THESE REVENUES THREE APPEALS ARE DISMISSED. ( A COPY OF THE INSTANT COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILE(S) . ORDER PRONOUNCED IN OPEN COURT ON 12/02/2020 SD/- SD/- ( ') (* ') (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS + - 12/02/2020 / KOLKATA ITA NO.403-405/KOL/2018 A. YS 2009-10 TO 2011-12 ACIT(IT) CIR-1(1), KOL. VS M/S GIFFORD LLP PAGE 16 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S GIFFORD & PARTNERS LTD., C/O MR. SUB RATA MITRA GARDEN REACH SHIPBUILD ERS & & ENGINEERS LTD., 43/46 GARDEN REACH ROAD, KOLKATA-2 4 2. ' /REVENUE-ACIT(IT), CIR-1(1), 2 ND FLOOR, AAYAKAR BHAWAN, POORVA, 110, SHANTI PALLY, KOLKA TA-107 3. . / / CONCERNED CIT 4. / - / CIT (A) 5. 0 **. , . /DR, ITAT, KOLKATA 6. 4 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ .,