DTAA between India and Mauritius- Assessee, a Mauritius based company was engaged in business of telecasting TV channels- Assessee carried out entire activities from Mauritius and all contracts were concluded in Mauritius- Only activity which was carried out in India was incidental or auxiliary/preparatory in nature which was carried out in a routine manner as per direction of assessee without application of mind: In aforesaid circumstances, assessee’s agent did not have any PE in India and, co<

The assessee is a Mauritius based company. The Revenue proceeded against it on the footing that it is engaged in the business of telecasting of TV channels such as B4U Music, MCM, etc. It is the case of the Revenue that the income of the assessee from India consisted of collections from time slots given to advertisers from India through its agents. The assessee claimed that it did not have any permanent establishment in India and has no tax liability in India. The Assessing Officer did not accept this contention of the assessee and held that affiliated entities of the assessee are basically an extension in India and constitute a permanent establishment of the assessee within the meaning of Article 5 of the DTAA . The Commissioner of Income Tax (Appeals) Mumbai, partly allowed the appeal in some cases and held that the entity in India cannot be treated as an independent agent of the assessee. Alternatively, and assuming that it could be treated as such if a dependent agent is paid remuneration at arm’s length, further proceedings cannot be taxed in India. The Tribunal upheld the decision of the Commissioner (Appeals).

On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:

“Assessee carried out entire activities from Mauritius and all contracts were concluded in Mauritius. It was also undisputed that only activity which was carried out in India was incidental or auxiliary/preparatory in nature which was carried out in a routine manner as per direction of assessee without application of mind. In aforesaid circumstances, assessee’s agent did not have any PE in India and, consequently, amount in question could not be brought to tax in India.”