Law:

Section:

Section 90 of the Income-tax Act, 1961, read with article 7 of the Double Taxation Avoidance Agreement between India and Singapore - Double taxation relief - Where agreement exists - Assessment year 1999-2000 - Assessee-company was a resident of Singapore - It was carrying on marketing activities in India through its Dependent Agent [DA] in India, for advertisement slots by canvassing advertisements in India - For relevant assessment year, it had filed return of income declaring certain business income - However, it claimed that it did not have any tax liability in India as it did not have a permanent establishment [PE] in India; and that since its DA was being remunerated on an arm's length basis and that income had been assessed to tax in hands of DA, there could not be further assessment of said income in its hands - Assessing Officer, however, rejected assessee's contentions - On appeal, Commissioner (Appeals) held that as assessee's business activities in India were wholly channelled through its agent; contracts to sell were made outside India; and sales were made on a principal-to-principal basis, para 6(c) of Circular No. 23, dated 23-7-1969 was applicable to assessee and further as assessee had remunerated its DA on an arm's length basis and said income had been taxed in hands of DA, in terms of article 7 of DTAA no further assessment could be made in hands of assessee - Whether Commissioner (Appeals) was justified in holding so - Held, yes Circulars and Notifications : Circular No. 23, dated 23-7-1969 and Circular No. 742, dated 2-5-1996 FACTS The assessee-company was a resident of Singapore. It, was carrying on marketing activities in India through its Dependent Agent [DA] for advertisement slots by canvassing advertisements in India. For the relevant assessment year, it had filed return of income declaring certain business income. However, it did not admit any tax liability on the said income on the pleas that it did not have a permanent establishment [PE] in India and its dependent agent was being remunerated on an arm's length basis; and that since income from various activities had been assessed to tax in the hands of DA, there could not be…

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