THE COMMISSIONER OF INCOME TAX -INTERNATIONAL TAXATION-3 vs. WE ARE VOICES ENTERTAINMENT INC

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ITA/183/2024HC DelhiDLHC01067989202314 March 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA3 pages

AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the receipts constituted business profits and were not chargeable to tax in India in the absence of a Permanent Establishment (PE). This was because the income was not classifiable as royalty or fee for included services (FIS) under the India-US DTAA.

What were the facts?

The assessee, We Are Voices Entertainment Inc., received income from talent booking agency services provided outside India. The revenue authorities sought to tax this income in India, arguing it was not business profit and lacked the attributes of a regular business. The ITAT held the income to be business profit not taxable in India without a Permanent Establishment (PE).

What were the issues?

Whether the income from talent booking agency services provided outside India is taxable in India in the absence of a PE, and if it constitutes business profit or other income under the DTAA.

Which sections of the Income-tax Act were involved?

Article 7, Article 23

AI-generated summary — verify with the full judgment below

$~81 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 183/2024

THE COMMISSIONER OF INCOME TAX -

INTERNATIONAL TAXATION-3

..... Appellant

Through: Mr. Ruchir Bhatia, SSC

versus

WE ARE VOICES ENTERTAINMENT INC ..... Respondent

Through: Mr. Vishal Kalra, Adv.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR

KAURAV

O R D E R %

14.03.2024 CM APPL. 15732/2024 Bearing in mind the disclosures made, the delay of 57 days in refiling the appeal is condoned.

The application shall stand disposed of.

ITA 183/2024 1. The Commissioner seeks to impugn the order of the Income Tax Appellate Tribunal [“ITAT”] dated 25 July 2023 and has proposed the following question for our consideration:- “2.1 Whether the Ld. ITAT has erred in law in holding that receipts of assessee business profit and hence not chargeable to tax in India in absence of PE ignoring the fact that the Assessee himself has stated in its submission that talent booking agency services were provided outside India and that no employee or personnel ever visited India either in connection with the event or otherwise in This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:19:45

relation to the services provided?

2.2 Whether the Ld. ITAT was correct in law in holding that receipts of Assessee constitute business profit and hence not chargeable to tax in India in absence of PE and not other income under article 23 of Indo-US DTAA ignoring that transaction between assessee and customer does not satisfy basic attribute of business i.e. regularly, continuity, frequency and volume?”

We take note of the following conclusions which have come to be recorded by the ITAT:- “7.4 Article 7(7) of the India-USA DTAA clearly defines 'business profit' to mean income derived from any trade or business including income from furnishing of services which are other than specified services (Royalties and FIS). It is not the case of the Ld. AO that the services rendered by the assessee are in the nature of FIS/royalty etc. In view of this, it cannot be said that the assessee was not engaged in business while rendering talent booking agency services to the Customer and hence the classification of the impugned receipts as 'Other Income' which is a residuary head is erroneous. Needless to say that Article 23 would apply only to items of income 'not expressly covered' or 'not dealt with' by provisions of other Articles in the relevant DTAA as held by judicial authorities in numerous decisions. 7.5 Based on the above, in our considered view the impugned receipts of the assessee from the Customer constitutes business profits and hence are not chargeable to tax in India in the absence of the PE of the assessee in India. Accordingly, ground Nos. 1, 3, 4 and 5 are decided in favour of the assessee.”

In light of the undisputed position that the income derived was not placed either under the head of fee for included service or fee for technical service, we find no justification to interfere with the view as expressed by the ITAT. Article 23 would have been attracted provided it were income not expressly covered or dealt with under any other Article of the DTAA. In any case once it was conceded that the income was neither classifiable as royalty or FIS, it would constitute business income and which could not have been subjected to tax in the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:19:45

absence of a PE. 4. No substantial question of law arises. The appeal fails and shall stand dismissed.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MARCH 14, 2024/neha This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 00:19:45

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