Law: Income Tax Act, 1961

Section: 9,115A,147

Section 9, read with sections 115A and 147, of the Income-tax Act, 1961 and article 27 of the Double Taxation Avoidance Agreement between India and USA - Income - Deemed to accrue or arise in India (Mutual Agreement Procedure) - Assessment years 2007-08 and 2008-09 - Assessee-company derived income from grant of exclusive rights to an Indian company to sell advertising on products and to distribute products - Assessing Officer, following MAP Resolution under article 27 of Indo-US DTAA, held that only 10 per cent of total advertisement and distribution revenue earned in India was taxable in India - Later on, Assessing Officer reopened assessment on grounds that MAP Resolution was only for assessment years 2001-02 to 2004-05 and revenue was accruing to assessee in assessment years 2007-08 and 2008-09 in pursuance of agreement, which was effective from 1-4-2006, it should have been offered and taxed at 10 per cent on gross basis as per section 115A - Whether when in original assessment, Assessing Officer had formed opinion that taxation of advertisement and distribution revenue earned by assessee was to be governed by MAP Resolution on basis of very same material he could not reopen assessment on ground that MAP resolution was only for assessment years 2001-02 to 2004-05 and revenue earned by assessee in assessment years 2007-08 and 2008-09 should have been taxed under section 115 - Held, yes [Paras 16 and 20] [In favour of assessee] FACTS â–  The assessee derived income from the grant of exclusive rights to an Indian company to sell advertising on certain products and to distribute certain products. â–  The Assessing Officer held that only 10 per cent of the total advertisement and distribution revenue earned in India was taxable in India. The Assessing Officer in the assessment order referred to the Mutual Agreement to avoid double taxation under article 27 of India/USA DTAA for the assessment years 2001-2002 to 2004-2005 and the fact that subsequently for the assessment year 2005-06, assessment was concluded following the MAP resolution. â–  Later on, the Assessing Officer reopened assessment on the ground that as the MAP Resolution was only for…

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