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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL
The present cross appeals have been filed by either parties challenging the order dated 22.08.2019, passed by the Commissioner of Income Tax (Appeals)–58, Mumbai (―the CIT(A)‖), under section 250 Income Tax Act, 1961 ("the Act") for the assessment year 2012–13.
The first issue to be decided in these cross appeals is, whether the assessee has a Permanent Establishment (―P.E.‖) in India in respect of advertisement revenue and distribution revenue received by the assessee. In this regard, the assessee has also raised an alternate plea that if the assessee is considered to have a P.E. in India whether any further profit need to be attributable to same if the P.E. has been remunerated at arm's length price.
The brief facts of the case pertaining to the above issue as emanating from the record are: The assessee is a foreign company registered under the Mauritian Law and is engaged in the business of telecasting its sports channel ―Ten Sports‖. The assessee is considered as ―Resident‖ for tax purpose in Mauritius as it is Registered in Mauritius. During the relevant assessment year, the assessee filed its return of income electronically on 29.11.2012, declaring total income of Rs.Nil. Along with its return of income, the assessee also filed report in Form no.3CEB as per the requirement of provisions of section 92E of the Act. 2
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019
The assessee had appointed Taj Television (India) Pvt. Ltd. (―Taj India‖) as an advertising sales agent vide agreement dated 08.05.2002, to sell commercial advertisement time to prospective advertisers and other parties in India in connection with business of programming and telecasting on ―Ten Sports‖ / ―Ten HD‖ / ―Ten Golf‖ Channels and to collect advertisement charges from India exporters and advertisers on behalf of the assessee. As per the agreement, Taj India is entitled to a commission @ 10% to 12.5% of the advertisement revenue collected for the assessee.
The assessee had also appointed Taj India as the distributor vide agreement dated 01.07.2004, which has been amended from time–to–time to distribute an encrypted advertiser and/or subscription supported television programming service known as ―Ten Sports‖ / ―Ten HD‖ / ―Ten Golf‖ to cable systems solely for exhibition to subscribers in India. The assessee does not have any Branch or Office in India and all the telecasting has been done from outside India. Thus, the assessee received revenue in the form of “Advertisement Spot Sales” and “Distribution Income”.
Along with its return of income, the assessee filed notes to the computation of income, wherein the assessee submitted that the assessee does not have a P.E. in India as the transactions entered into by the assessee are on principal–to–principal basis and at arm's length price. The assessee further submitted that Taj India has not habitually exercised any authority to conclude contract on behalf of the assessee in India.
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 Accordingly, the assessee in the said note submitted that in view of the provisions of Article–7 of India Mauritius Double Taxation Avoidance Agreement (―DTAA‖) r/w section 90(2) of the Act, the income of the assessee is not subject to tax in India. It was further submitted that the profit, if any, attributable to Taj India has already been taxed in India and, therefore, there is no requirement to attribute any further profit.
During the course of assessment proceedings, the Assessing Officer on the basis of past records/assessments asked the assessee to show cause as to why the Indian entity should not be treated as dependent P.E. and income to be computed accordingly. In response thereto, the assessee submitted that all the advertisement sales contracts were entered into by advertisers and the assessee. Taj India did not have the authority to conclude contracts in the name of the assessee. Further, Taj India had never exercised the authority to conclude the contracts and the assessee continued to conclude the contract with the advertisers, despite addendum dated 27.04.2006, w.e.f. 01.04.2006, whereby clause 5(a) was replaced in the Advertisement Agreement granting authority to Taj India to conclude the contracts. Further in respect of distribution, Taj India entered into agreement with distributors or cable operators for distribution of sports channels. Taj India was appointed by the assessee as its distributor and Taj India in turn appointed sub–distributors and cable operators to carry out the task deputed by the assessee in better manner. Taj India had compensated sub–distributors and cable operators out of its own share of Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 25%. Accordingly, the assessee submitted that Taj India had entered into agreement with distributors or cable operators on its own account as principal distributor and not on behalf of the assessee. Thus, in respect of distribution revenue arrangement, the relationship between the assessee and Taj India was on principal–to–principal basis.
The Assessing Officer, vide order dated 22.04.2016, passed under section 144C(3) r/w section 143(3) of the Act came to a conclusion that Taj India was acting wholly and exclusively for the assessee as a dependent agent and was regularly selling the advertisement spots on behalf of the assessee. Taj India was also functionally and economically dependent on the assessee and thus, is a dependent agent of the assessee within the meaning of Article–5 of India Mauritius DTAA. The Assessing Officer further held that as Taj India had authority to conclude contracts in the name of the assessee and also has exercised this authority habitually and repeatedly in India, the assessee has a P.E. in India within the meaning of Article–5(4)(i) of the India Mauritius DTAA. Further, in respect of distribution revenue, the Assessing Officer held that Taj India has the exclusive right to represent the assessee before the distribution system / cable operators and negotiate and procure cable distribution license agreement for the services, for which Taj India was authorized by the assessee. Further, the distribution revenue collected by Taj India shall be shared in the ratio of 86:14 by the assessee and Taj India respectively. Accordingly, the Assessing Officer held that the assessee has a P.E. in India
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 and as such the subscription revenue is taxable on net basis in the hands of the assessee. Thus, the Assessing Officer held that in respect of both the contracts, the assessee has a dependent agent P.E. in India in the form of Taj India. The Assessing Officer also did not agree with the submissions of the assessee that if the payment to the agent is made on arm's length then no further profit needs to be attributed. As a result, the Assessing Officer attributed 75% of the assessable profits arising from Indian operations to the functions performed by dependent agent P.E. for the purpose of taxation in India, following the approach adopted by the Revenue in earlier assessment years.
In appeal, the CIT(A) following the order passed by the Co–ordinate Bench of Tribunal in assessee‟s own case for the assessment years 2006– 07 to 2011–12, inter-alia, held that the assessee does not have any P.E. in India with respect to the distribution function. Being aggrieved by the order passed by the CIT(A), both the assessee and the Revenue are in appeal before us. While the assessee is challenging the conclusion of CIT(A) that the assessee has a P.E. in India in respect of advertisement revenue. On the other hand, Revenue, inter-alia, is aggrieved with the CIT(A)‟s finding on P.E. with respect to the distribution revenue.
During the course of hearing, Shri Madhur Agarwal, learned Counsel appearing for the assessee submitted that the issue of existence of assessee‟s P.E. in India in respect of distribution income has been decided
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 in favour of the assessee by various decisions of the Tribunal in assessee‟s own case for preceding assessment years. The learned Counsel fairly submitted that the issue of existence of assessee‟s P.E. with respect to advertisement revenue was left upon by the Tribunal in preceding assessment years and only with respect to distribution revenue, the assessee was held not to have a P.E. in India. The learned Counsel further submitted that the arm's length analysis conducted by the assessee in respect of advertisement revenue was also accepted by the Transfer Pricing Officer and thus no further profit needs to be attributed to the alleged P.E. of assessee in India.
On the other hand, Shri Milind S. Chavan, the learned Departmental Representative (―learned D.R.‖) by referring to the addendum dated 27.04.2006, to Advertisement Sales Agency Agreement submitted that Taj India had the right and authority to assume or create an obligation of any kind in the name of and on behalf of the assessee and thus Taj India constitutes dependent agent P.E. of the assessee in India within the meaning of Article 5(4) of the India Mauritius DTAA. Further, by referring to addendum dated 28.12.2007 to distribution agreement, the learned D.R. submitted that Taj India had the authority to enter agreement with third parties on behalf of the assessee and thus constitutes dependent agent P.E. in India of the assessee in terms of the aforesaid provisions of India Mauritius DTAA.
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019
We have considered the rival submissions and perused the material available on record. Under the Distribution Agreement dated 20.10.2005, Taj India was granted exclusive distribution rights with respect to distribution of encrypted advertiser and/or subscription supported television programming service known as ―Ten Sports‖ to cable systems solely for exhibition to subscribers in India either directly or through one or more Distributors. Accordingly, Taj India in turn appointed sub–distributors and cable operators. The clause 1.3 of the aforesaid Distribution Agreement dated 20.10.2005 reads as under:
“1.3 Taj India shall have the distribution rights for distribution of the Service in India to Distributor and Permitted Systems and negotiate and procure cable distribution license Agreements with Permitted Systems for the Service consistent with the terms thereof. Taj India shall enter into Agreements with third parties on its own behalf and in its own name. Upon Taj’s request, Taj India shall inform Taj in advance and regularly update Taj regarding the negotiations of any proposed License Agreements with Permitted Systems.”
Thus the clause as it existed in the aforesaid Distribution Agreement specifically provided that all the agreements entered into by Taj India with third parties shall be on its own behalf and in its own name. The aforesaid clause of the Distribution Agreement was replaced by the Addendum dated 28.12.2007 and the new clause 1.3 reads as under:
“1.3 Taj-India shall have the distribution rights for distribution of the Service in India to Distributor and Permitted Systems and negotiate and procure cable distribution license Agreements with Permitted Systems for the Service consistent with the terms thereof. Taj-India shall have the authority to enter into Agreements with third parties on behalf of the Taj. Upon Taj’s request, Taj –India shall inform Taj in advance and regularly
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 update Taj regarding the negotiations of any proposed License Agreements with Permitted Systems.”
The Revenue has placed reliance on this clause, as replaced by the Addendum dated 28.12.2007, to allege that Taj India constitutes dependent agent P.E. of the assessee in India. In order to decide the issue whether the assessee has a P.E. in India with respect to the Distribution revenue under India Mauritius DTAA, it is relevant to analyse the provisions of Article 5(4) of the DTAA, which reads as under:
“4. Notwithstanding the provisions of paragraphs (1) and (2) of this article, a person acting in a Contracting State for or on behalf of an enterprise of the other Contracting State [other than an agent of an independent status to whom the provisions of paragraph (5) apply] shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if : (i) he has and habitually exercises in that first-mentioned State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise ; or (ii) he habitually maintains in that first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly fulfils orders on behalf of the enterprise.”
As per the provisions of Article 5(4)(i) of the DTAA, it is only when the person in a Contracting State has and habitually exercises the authority to conclude contracts in the name of the other enterprise, such person shall be deemed to be the P.E. of the other enterprise. Thus in order to invoke the provisions of Article 5(4)(i) of the DTAA, both the conditions i.e. (a) person has concluded the contract and (b) person habitually exercise the authority to conclude the contract, need to be satisfied. However, in the present case, the Revenue, except merely referring to the aforesaid clause 9
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 of the Addendum, has neither established nor brought anything on record, either at the assessment stage or before us, that Taj India had habitually exercised the authority to conclude the contract on behalf of the assessee. Thus, the Revenue has failed to discharge the burden casted on it to prove that the twin conditions provided in Article 5(4)(i) of the DTAA are satisfied in the facts of the present case. As held by the Special Bench of the Tribunal in the case of Motorola Inc. v. Dy. CIT: [2005] 95 ITD 269 that DTAA is only an alternative tax regime and not an exemption regime and therefore, the burden is first on the Revenue to show that the assessee had a taxable income under the DTAA, and then the burden is on the assessee to show that its income is exempt under DTAA. Similarly, was held by the Co-ordinate Bench of the Tribunal in ITO v. Right Florists (P) Ltd. [2013] 143 ITD 445 (Kol-Trib.). In view of the above, Taj India cannot be held to be dependent agent P.E. of the assessee in India under Article 5(4)(i) of the India Mauritius DTAA with respect to the distribution revenue. Accordingly, to this extent order passed by the CIT(A) is upheld and the grounds raised by the Revenue are dismissed.
Insofar as the appeal of the assessee against the conclusion of CIT(A) that the assessee had a P.E. in India in respect of advertisement revenue, it is pertinent to note that Revenue has not been denied that Taj India was remunerated at arm‟s length price with respect to advertisement revenue and transfer pricing analysis was also accepted by the Transfer Pricing Officer vide order dated 28.12.2015 passed under section 92CA(3)
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 of the Act. We find that on similar issue, the Co–ordinate Bench of the Tribunal in assessee‟s own case vide order dated 23.12.2016, passed in Taj TV Ltd. v/s ADIT, [2017] 162 ITD 674, for assessment years 2006-07 to 2008-09, observed as under:
“9………..Thus, if admittedly Taj India is being remunerated at arm's length, then, no further income/profit can be said to be attributable to the assessee in India from PE. It is an undisputed fact that the TPO has accepted the transaction between the assessee and Taj India at an arm's length price. Hence, respectfully following the law laid down by the Hon'ble Apex Court and followed by the Hon'ble jurisdictional High Court, we also hold that if the arm's length price of the transaction has been accepted, between the assessee and Taj India, then nothing further should be attributable to the assessee which is to be taxed in India. Thus, on this reasoning we allow the assessee's ground No.1.”
The legal principle followed by the Co-ordinate Bench of Tribunal is equally applicable to the facts of the present case. Thus, respectfully following the decision of the Co–ordinate Bench rendered in assessee‟s own case cited supra, we accept the alternative plea of the assessee and held that as Taj India was remunerated at arm‟s length price in respect of advertisement revenue, no further profit needs to be attributed to same for the purpose of taxation in India. Further, as regards the issue of existence of P.E. with respect to advertisement revenue, same is left open. Accordingly to this extent, order passed by the CIT(A) is set aside and addition made by Assessing Officer with respect to advertisement revenue is directed to be deleted. As a result, the appeal filed by the assessee is allowed on the alternative plea.
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019
The next issue to be decided in Revenue‟s appeal is regarding disallowance of transponder fees and uplinking charges under section 40(a)(i) of the Act.
The brief facts of the case pertaining to this issue as emanating from the record are: The assessee had made majority of payments from outside India to various non–residents. During the relevant assessment year, the assessee paid transponder fees of U.S. dollar 379,369 and uplinking charges of U.S. dollar 1,109,721. The aforesaid payments were made to an entity i.e. Intelsat who was a tax resident of USA and was engaged in the business of providing transponders facilities to various entities in the world. Intelsat was not carrying any business activities in India and also did not have any business connection in India as per section 9(1)(i) of the Act. Further, the transponder was also placed outside India. The payments were made to Intelsat for providing facilities of transponder for telecasting channels of the assessee in various countries including India. The assessee claimed that since all the activities of transponder service providers were happened to be outside India, the source of income is situated outside India and no part of the income can be deemed to have been received by Intelsat in India under the provisions of the Act. Further, these items were also claimed to be not covered within the definition of Royalty provided in Article–12 of the India USA DTAA. The Assessing Officer vide order dated 22.11.2016, did not agree with the submissions of the assessee in view of Explanation–4, 5 and 6, inserted in section 9(1)(vi) with retrospective
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 effect from 01.06.1976. The Assessing Officer held that the payment made by the assessee for satellite (uplinking and down linking) would qualify as „process‟ within the meaning of Explanation–6 to the aforesaid section. Accordingly, the Assessing Officer held that the payments made by the assessee are taxable as Royalty under section 9(1)(vi) of the Act. Further, the Assessing Officer held that the payment of uplinking and transponder fees is also taxable in India as Royalty as per Article–12 r/w Article–3(2) of India USA DTAA. Accordingly, the Assessing Officer disallowed the aforesaid payments under section 40(a)(i) of the Act for non–deduction of TDS.
In appeal, the CIT(A) following the decision of the Co–ordinate Bench of the Tribunal rendered in assessee‟s own case for the assessment years 2006–07 to 2011–12, inter-alia, deleted the addition made by the Assessing Officer in respect of transponder fees and uplinking charges. Being aggrieved, the Revenue is in appeal before us.
During the course of hearing, the learned D.R. by referring to Article– 3(2) of India USA DTAA submitted that the law in force in India should be applied and the impugned payments should be treated as royalty within the meaning of section 9(1)(vi) of the Act r/w Article 12 and Article–3(2) of India USA DTAA. The learned D.R. in support of his submissions placed reliance on the decision of the Hon'ble Jurisdictional High Court in CIT v/s Siemens Aktiongesellschaft, 177 Taxman 81.
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019
On the other hand, the learned Counsel submitted that the issue in Revenue‟s appeal has been decided in favour of the assessee by various decisions of the Co–ordinate Bench of the Tribunal in assessee‟s own case.
We have considered the rival submissions and perused the material available on record. We find that on identical issue, the Co–ordinate Bench of the Tribunal in assessee‟s own case vide order dated 05.07.2016, passed in ADIT v/s Taj TV Ltd., [2016] 161 ITD 339, for assessment years 2003– 04 to 2005–06, dismissed the Revenue‟s appeal by observing as under:–
―19. First of all, let us examine the definition of "royalty" as been defined under Article 12 of the Indo-US-DTAA, which has been defined in the following manner: '3. The term "royalties" as used in this Article means: (a) payments of any kind received as a consideration for the use of or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof; and (b) payments of any kind received as consideration for the use of or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of Article 8.' The article gives exhaustive definition of the term 'royalty' and therefore, the definition and scope of 'royalty' is to be seen from the Article alone and no definition under the domestic Act or law is required to be considered or seen or any amendment made in such definition whether retrospective or prospective which can be read in a manner so as to extend any operation to the terms as defined or understood in the Treaty. The Legislature or Parliament while carrying out amendment to interpret or define a given provision under the Domestic Law of the country cannot supersede or control the meaning of the word which has been expressly defined in a Treaty negotiated between executives of two sovereign nations. The Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 payment of transponder charges to PanAmSat and uplinking charges cannot be treated as a consideration for 'use' or 'right to use' any copyright of various terms used in para 3(a) like copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting or in any manner relates to any patent or trademark, design, secret formula or process. It is also not use or right to use any industrial, commercial, or scientific equipment. There is no such kind of right to use which is given by Pan Am Sat to assessee. Thus, the said payment does not fall within the ambit of the terms used in para 3 of Article 12. So far as the reading of amended definition of 'royalty' as given in section 9(1)(vi) into treaty, Hon'ble Delhi High Court in its latest judgment in the case of New Skies Satellite BV (supra), wherein it has considered Hon'ble Madras High Court decision in the case of Verizon Communications Singapore Pte Ltd. (supra) also, have discussed the issue threadbare and came to the conclusion in the following manner:— "60. Consequently, since we have held that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word "royalty" in Asia Satellite, supra note 1, when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the filed for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both partners to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so that such income automatically becomes royalty. It is reiterated that the Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no Double Tax Avoidance Agreement." The aforesaid decision takes care of all the arguments relied upon by the ld. DR including that of the Verizon Communications Singapore Pte Ltd's. The Hon'ble High Court has specifically clarified as to why the said decision of Madras High Court cannot be applied in such cases after observing as under:— "31. In a judgment by the Madras High Court in Verizon Communications Singapore Pte Ltd. v. The Income Tax Officer, International Taxation I, [2014] 361 ITR 575, the Court held the Explanations to be applicable to not only the domestic definition but also carried them to influence the meaning of royalty under Article 12. Notably, in both cases, the clarificatory nature of the amendment was not questioned, but was instead applied squarely to assessment years predating the amendment. The crucial difference between the judgments however lies in the application of the amendments to the DTAA. While TV Today, supra note 22 recognizes that the question will have to be decided and the submission argued, Verizon, supra note 23 cites no reason for the extension of the amendments to the DTAA.‖ Thus, respectfully following the ratio laid down by the Hon'ble Delhi High Court, we hold that, the definition of royalty as enlarged by Finance Act, 2012 with retrospective effect will not have any affect in Article 12 of DTAA.
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20. Otherwise also, now it is quite trite position that, at the time of making the payment when there is no amendment in the statute, then assessee cannot be expected to withhold the tax, especially when under the old provision or by virtue of any judicial precedent such payment does not fall or has been held to be not falling within the ambit and scope of 'royalty'. In these kinds of cases there were various decisions including that of the Hon'ble Bombay High Court in the case of Set Satellite (Singapore) Pte Ltd. that payment made to the non-resident outside India for rendering the services of equipment outside India is not taxable in India. Hon'ble Delhi High Court in the case of Asia Satellite Telecommunications Co. Ltd. v. DIT [2011] 332 ITR 340/197 Taxman 263/9 taxmann.com 168 later on reiterated that there is no royalty payment in such cases under the domestic law, that is, section 9(1)(vi), prior to amendment. Thus judicial precedents supported the case of the assessee. Here, the maxim of "lex non cogit ad impossplia, that is, the law of the possibly compelling a person to do something which is impossible, that is, when there is no provision for taxing an amount in India then how it can be expected that a tax should be deducted on such a payment. This view has been upheld by in catena of decisions including the ITAT Mumbai Benches in the case of Channel Guide India Ltd (supra) wherein, it has been held that, assessee cannot held to be liable for deducting TDS in view of the retrospective amendment which has come at a much later date. Thus, we hold that assessee was not liable to deduct TDS at the time of making the payments. Accordingly, disallowance under section 40(a)(i) could not have been made by the AO and the order of the CIT(A) is affirmed. Ground No.2(a) & (b) raised by the revenue are dismissed.‖
As the facts and circumstances of the present case are similar to the earlier assessment years, wherein transponder fees and uplinking charges were paid by the assessee and India USA DTAA provisions were considered, respectfully following the decision of the Co–ordinate Bench rendered in assessee‟s own case cited supra, we hold that the aforesaid payments are not in the nature of Royalty within the meaning of Article–12 of the India USA DTAA.
Further, as regards the reliance placed by learned D.R. on the decision of Hon‟ble Jurisdictional High Court in Siemens Aktiongesellschaft
Taj TV Limited ITA No. 6588/Mum./2019 ITA No. 6741/Mum./2019 (supra), it is pertinent to note that in ACIT v. Reliance Jio Infocomm Ltd. [2019] 111 taxmann.com 371, another Co-ordinate Bench of the Tribunal noted the difference in wordings of DTAA dealt with in Siemens Aktiongesellschaft (supra) and observed as under:
―17. So far as our purposes are concerned, it is sufficient to take note of the fact that the provisions of Article 3(2) of Indo Singaporean tax treaty are differently worded vis-à-vis the old Indo German tax treaty that Hon'ble jurisdictional High Court were dealing with in Siemens Aktiongesellschaft's case (supra) and the crucial words "laws in force" on which so much emphasis was placed in judicial analysis by Hon'ble jurisdictional High Court do not find place in this treaty. Strictly speaking, therefore, the judicial sanction for the theory of ambulatory interpretation, for the purpose of article 3(2), does not, therefore, necessarily extend to Indo Singaporean tax treaty that we are concerned with.‖ 24. The provisions of Article 3(2) of India US DTAA are similar to India Singapore DTAA, which were considered by Co-ordinate Bench of the Tribunal in aforesaid decision. Accordingly, respectfully following the judicial precedence in assessee‟s own case, the order passed by the CIT(A), deleting the disallowance made by the Assessing Officer under section 40(a)(i) of the Act, is affirmed. Consequently, the grounds raised by the Revenue are dismissed.
In the result, the appeal by the assessee is allowed, while the appeal by the Revenue is dismissed in terms of our aforesaid findings. Order pronounced in the open court on 22.03.2022