Commissioner Of Income Tax (It)-4 … v. Taj Tv Limited …

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL (IT) NO.1984 OF 2017 WITH INCOME TAX APPEAL (IT) NO.1437 OF 2017 Commissioner of Income Tax (IT)-4…AppellantVs.Taj TV Limited…Respondent Mr. Tejveer Singh for Appellant.Mr. Madhur Agarwal a/w. Mr. Atul K. Jasani for Respondent. CORAM : UJJAL BHUYAN,MILIND N. JADHAV, JJ.DATE :FEBRUARY 06, 2020 P.C.: This order will dispose of both Income Tax Appeal Nos.1437 and1984 of 2017. 2.Heard Mr. Singh, learned standing counsel Revenue for theappellant and Mr. Agarwal along with Mr. Jasani, learned counsel for therespondent. 3.Income Tax Appeal No.1437 of 2017 has been preferred by theRevenue against the common order dated 05.07.2016 passed by theIncome Tax Appellate Tribunal, Mumbai Bench "L", Mumbai (Tribunal)in I.T.A.Nos.4176/ Mumbai/2009 and 4706/Mumbai/2009 for theassessment year 2005-06. 4.Income Tax Appeal No.1984 of 2017 has been preferred by theRevenue against the aforesaid common order dated 05.07.2016 passedby the Tribunal in I.T.A.Nos.412/Mumbai/2008 and 5536/Mumbai/2008for the assessment year 2004-05. 5.However, for the sake of convenience, facts of Income TaxAppeal No.1984 of 2017 which pertains to earlier assessment year i.e.,assessment year 2004-05 are being considered. 6.This appeal has been preferred by the Revenue under Section 260-A of the Income Tax Act, 1961 (briefly 'the Act' hereinafter). 7.Though three questions have been proposed in the appeal, Mr.Singh fairly submits that appellant would press the third question i.e.question No.(c), which reads as under: "(c)Whether on the facts and in the circumstances of the caseand in law, the Tribunal erred in holding that there was noagency Permanent Establishment in the form of Taj Indiawithout appreciating that the transaction between the assesseeand Taj India could not be said to be on principle to principlebasis?" 8.To appreciate the controversy in question, a brief recital of thefacts is considered necessary. 9.Respondent - assessee is a registered company in Mauritius and isa tax resident of that country. Assessee is engaged in telecasting thesports channel called "Ten Sports". Assessee has appointed TajTelevision (India) Private Limited, referred to hereinafter as 'Taj India',as its advertising sales agent in India to sell commercial advertisementspots to prospective advertisers and other parties in India in connectionwith the business of programming and telecasting of Ten Sports Channeland to collect advertisement charges from the Indian advertisers. In thisconnection, assessee had entered into an agreement with Taj India on08.05.2002. 10.Assessee had also appointed Taj India as its distributor todistribute the Channel ‘Ten Sports’ to cable systems for exhibition tosubscribers in India. In this connection, an agreement dated 01.03.2002was entered into between the assessee and Taj India. 10.Assessee had also appointed Taj India as its distributor todistribute the Channel ‘Ten Sports’ to cable systems for exhibition tosubscribers in India. In this connection, an agreement dated 01.03.2002was entered into between the assessee and Taj India. 11.In the assessment proceedings for the assessment year 2004-05,the assessing officer sought for the views of the assessee regarding non-taxability of its income in India since it did not carry any business inIndia through its Permanent Establishment (PE) and as to why it wasfiling an alternative computation of income. Assessee submitted reply.Referring to the India-Mauritius Double Tax Avoidance Agreement,more particularly Article 5 thereof, which defines PermanentEstablishment, it was contended on behalf of the assessee that it was notcovered by any of the clauses of the Double Tax Avoidance Agreement(DTAA) and as such, it did not have a Permanent Establishment in India.Transactions between assessee and Taj India are on a principal toprincipal basis and at arm's length prices. Taj India did not have anyauthority to enter into any contract on behalf of the assessee.Advertisement sales contracts were entered into between the advertisersand the assessee; therefore, it was contended that there was noPermanent Establishment in India. Consequently, no further taximplication arose. 12.Assessing officer vide the assessment order dated 28.12.2006however did not agree with the contention of the assessee, and after adetailed order, recorded the conclusion that Taj India had authority toconclude contracts in the name of the assessee which authority wasexercised in India habitually and repeatedly. Therefore, it was held thatassessee had a Permanent Establishment in India within the meaning ofArticle 5.4(i) of the DTAA between India and Mauritius. 12.1. Regarding distribution revenue, assessing officer held that thesame was collected through Taj India on behalf of the assessee. Afterconsidering the agreement dated 01.03.2002, assessing officer held thatTaj India had the exclusive right to represent the assessee before thedistribution systems / cable operators and to negotiate and procure cabledistribution licence agreement for the service as authorized by the assessee. Distribution revenue collected by Taj India was shared in theratio of 60:40 by the assessee and Taj India. Therefore, assessing officerheld that the assessee had a Permanent Establishment in India and thesubscription revenue was taxable as business income. 13.Aggrieved by the above, assessee preferred appeal before theCommissioner of Income Tax (Appeals)-XXXI, Mumbai, referred tohereinafter as the 'first appellate authority'. In the appellate proceedings,the first appellate authority considered the two aspects i.e., collection ofadvertisement revenue and revenue earned from distribution of paychannel. 13.1. Regarding collection of advertisement revenue, the first appellateauthority considered the agreement dated 08.05.2002 as well as findingsreturned by the assessing officer. Thereafter, it was held that Taj Indiawas fully dependent on the assessee for its business. Taj India wastherefore, a dependent agent. Consequently, after considering Article5(4) of the DTAA, the first appellate authority vide the appellate orderdated 17.10.2007 agreed with the assessing officer that assessee hadagency Permanent Establishment in India as per Article 5(4) forcollection of advertisement revenue. Consequently, finding of theassessing officer in this regard was sustained. 13.1. Regarding collection of advertisement revenue, the first appellateauthority considered the agreement dated 08.05.2002 as well as findingsreturned by the assessing officer. Thereafter, it was held that Taj Indiawas fully dependent on the assessee for its business. Taj India wastherefore, a dependent agent. Consequently, after considering Article5(4) of the DTAA, the first appellate authority vide the appellate orderdated 17.10.2007 agreed with the assessing officer that assessee hadagency Permanent Establishment in India as per Article 5(4) forcollection of advertisement revenue. Consequently, finding of theassessing officer in this regard was sustained. 13.2. Regarding distribution revenue, first appellate authority examinedthe distribution agreement entered into between the assessee and TajIndia on 01.03.2002 wherefrom he deduced that Taj India was appointedas the exclusive distributor in India. Taj India was not acting as agent ofthe assessee but had obtained right of distribution for TV channel foritself. It was found by the first appellate authority that Taj India hadsubsequently entered into contracts with other parties in its own name.One such contract was examined; whereafter first appellate authoritynoted that in such contract, assessee did not figure at all. He, therefore,came to the conclusion that assessee had given distribution rights to Taj India for promoting and distributing TV channels in India on principal toprincipal basis. He opined that Taj India was not acting as agent of theassessee in India and the distribution agreement had given exclusiverights to Taj India to distribute the channel in India on its own behalf andnot on behalf of the assessee. In such circumstances, it was held that TajIndia did not constitute an agency Permanent Establishment within themeaning of Article 5(4) of the DTAA in respect of the distributionincome. To this effect, finding of the assessing officer was set aside. 14.Assailing the order of the first appellate authority, both theRevenue and the assessee preferred separate appeals before the Tribunal.While the Revenue’s appeal being I.T.A.No.412/Mumbai/2008 wasagainst the finding of the first appellate authority as regards thedistribution revenue, the appeal by the assessee being I.T.A.No.5536/Mumbai/2008 was regarding collection of advertisement revenue. 15.In so far the assessee’s appeal i.e., I.T.A.No.5536/Mumbai/2008 isconcerned, the same was dismissed as being time barred. Regardingappeal by the revenue on the issue of distribution revenue, i.e., I.T.A.No.412/Mumbai/2008, Tribunal held that none of the conditions asstipulated in Article 59(4) of the DTAA was applicable because Taj Indiawas acting independently qua its distribution rights and the entireagreement was on principal to principal basis. Therefore, the distributionincome by the assessee could not be taxed in India because Taj India didnot constitute an agency Permanent Establishment under the terms of thesaid Article. This finding of the first appellate authority was upheld andthe challenge made thereto by the Revenue was dismissed. 15.1. Hence, the Revenue is before us in appeal. Assessee has notpreferred further appeal against dismissal of its appeal. 16.Learned counsel for the parties have made detailed submissionsand have taken us to the orders passed by the authorities below. They have also referred to the various provisions of the DTAA, moreparticularly clause 5 thereof. 17.Submissions made by learned counsel for the parties have beenconsidered; also perused the materials on record. 15.1. Hence, the Revenue is before us in appeal. Assessee has notpreferred further appeal against dismissal of its appeal. 16.Learned counsel for the parties have made detailed submissionsand have taken us to the orders passed by the authorities below. They have also referred to the various provisions of the DTAA, moreparticularly clause 5 thereof. 17.Submissions made by learned counsel for the parties have beenconsidered; also perused the materials on record. 18.At the outset, we may advert to the DTAA entered into betweenIndia and Mauritius. The said agreement was entered into between thetwo countries for avoidance of double taxation and for prevention offiscal evasion with respect to taxes on income and capital gains and alsoto encourage mutual trade and investment. The Central Government inexercise of the powers conferred by Section 90 of the Act and Section24-A of the Companies (Profits) Surtax Act, 1964 issued notificationdated 06.12.1983 (as amended) directing that all the provisions of thesaid DTAA shall be given effect to in the Union of India. 19.As per Article 3(1)(c), the expressions ‘a Contracting State’ and‘the other Contracting State’ mean India or Mauritius as the contextrequires. Article 5 thereof defines ‘Permanent Establishment’. Clause 1says that the term ‘permanent establishment’ means a fixed place ofbusiness through which the business of the enterprise is wholly or partlycarried on. As per clause 2, which is an inclusive provision, the term‘permanent establishment’ shall include a place of management; abranch; an office; a factory; a workshop; a warehouse in relation to aperson providing storage facilities to others; a mine, an oil or gas well, aquarry or any other place of extraction of natural resources; a firm,plantation or other place where agricultural, forestry, plantation orrelated activities are carried out; and a building site or construction orassembly project or supervisory activities in connection therewith, wheresuch site, project or supervisory activity continues for a period of morethan nine months. Clause 3 provides the exclusions to the term‘permanent establishment’. 20.Clause 4 is relevant and is extracted hereunder: “4.Notwithstanding the provisions of paragraphs (1) and (2)of this article, a person acting in a Contracting State for or onbehalf of an enterprise of the other Contracting State [otherthan an agent of an independent status to whom the provisionsof paragraph (5) apply] shall be deemed to be a permanentestablishment of that enterprise in the first-mentioned State if: (i)he has and habitually exercises in that first-mentionedState, an authority to conclude contracts in the name of theenterprise, unless his activities are limited to the purchase ofgoods or merchandise for the enterprise; or (ii)he habitually maintains in that first-mentioned State astock of goods or merchandise belonging to the enterprise fromwhich he regularly fulfills orders on behalf of the enterprise.” “4.Notwithstanding the provisions of paragraphs (1) and (2)of this article, a person acting in a Contracting State for or onbehalf of an enterprise of the other Contracting State [otherthan an agent of an independent status to whom the provisionsof paragraph (5) apply] shall be deemed to be a permanentestablishment of that enterprise in the first-mentioned State if: (i)he has and habitually exercises in that first-mentionedState, an authority to conclude contracts in the name of theenterprise, unless his activities are limited to the purchase ofgoods or merchandise for the enterprise; or (ii)he habitually maintains in that first-mentioned State astock of goods or merchandise belonging to the enterprise fromwhich he regularly fulfills orders on behalf of the enterprise.” 20.1. Clause 4 starts with a non obstante clause. It starts with the word‘notwithstanding’ the provisions of paragraphs (1) and (2) of Article 5, aperson acting in a contracting State for or on behalf of an enterprise ofthe other contracting State shall be deemed to be a permanentestablishment of that enterprise in the first-mentioned State if the twoconditions are fulfilled. Firstly, he has and habitually exercises in thefirst-mentioned State, an authority to conclude contracts in the name ofthe enterprise, unless his activities are limited to the purchase of goodsor merchandise for the enterprise. Secondly, he habitually maintains inthat first mentioned State, a stock of goods or merchandise belonging tothe enterprise from which he regularly fulfills orders on behalf of theenterprise. Thus, the sum and substance of clause 4 of Article 5 is that aperson acting in a contracting State on behalf of an enterprise of theother contracting State shall be deemed to be a permanent establishmentof that enterprise in the first-mentioned contracting State if he habituallyexercises in the first contracting State an authority to conclude contractsin the name of the enterprise and he habitually maintains in the firstcontracting State a stock of goods or merchandise belonging to theenterprise from which he regularly fulfills orders on behalf of theenterprise. 21.Having noted the requirement of Article 5 of the DTAA, we may now advert as to how the matter was dealt with by the first appellateauthority. As already noticed above, in so far advertisement revenue isconcerned, the first appellate authority concurred with the findings of theassessing officer that the assessee had an agency PermanentEstablishment in India which is Taj India within the meaning of Article5(4) of the DTAA. Therefore, this part of the income was liable to betaxed in India. 21.1. In so far revenue earned by Taj India on account of distribution ofpay channel, the first appellate authority held as under: 21.Having noted the requirement of Article 5 of the DTAA, we may now advert as to how the matter was dealt with by the first appellateauthority. As already noticed above, in so far advertisement revenue isconcerned, the first appellate authority concurred with the findings of theassessing officer that the assessee had an agency PermanentEstablishment in India which is Taj India within the meaning of Article5(4) of the DTAA. Therefore, this part of the income was liable to betaxed in India. 21.1. In so far revenue earned by Taj India on account of distribution ofpay channel, the first appellate authority held as under: “3.3I have examined the arguments of the AR and I have alsoexamined the facts. The AR filed the Distribution Agreement,and copies of agreement entered into by the distributor with thecable operators. The AR had explained that a sub-distributoragreement was entered into between Taj India and HMA UdyogLtd. on 11.03.2002. Copy of this agreement has been filed.Agreements with the cable operators are entered into by thesub-distributor. A sample copy of the same has also been filed. Ihave examined the Distribution Agreement between theappellant and Taj India. Perusal of the agreement reveals thatthe appellant has appointed Taj India as exclusive distributor inIndia. Further agreement provides that appellant shall nottransmit for cable distribution, any other Ten Sports channelservice that is not distributed in cable in India by Taj India. Inother words, Taj India is the exclusive distributor and prohibitsappellant from entering into distribution agreement withanybody else. Para-1.2 of the agreement provides that the TajIndia shall have the exclusive right to represent Taj andnegotiate and procure cable distribution and license agreement.Para-3.8 provides that Taj India shall be solely responsible formarketing and promoting the service to help drive cableoperators’ sales. The amount and type of said marketingsupport shall be at the discretion of Taj India. The responsibilityof appellant would be of providing the services signal to TajIndia. Para-7 of the agreement provides that Taj India shallhave the first right to negotiate and additional 3 year term forthe contract. 3.4.Perusal of the Distribution Agreement clearly providesthat Taj India is not acting as agent of appellant but hasobtained right of distribution of TV channel for itself andsubsequently it is entering into contract with other parties in itsown name. This fact is proved by the cable sub-distributionagreement dated 11.03.2002 entered into between Taj India andHMA Udyog Ltd., which has appointed HMA Udyog Ltd. assub-distributor in India. As per the agreement, 75% of the 3.4.Perusal of the Distribution Agreement clearly providesthat Taj India is not acting as agent of appellant but hasobtained right of distribution of TV channel for itself andsubsequently it is entering into contract with other parties in itsown name. This fact is proved by the cable sub-distributionagreement dated 11.03.2002 entered into between Taj India andHMA Udyog Ltd., which has appointed HMA Udyog Ltd. assub-distributor in India. As per the agreement, 75% of the revenue would be the income of Taj India and balance 25%would be the income of HMA Udyog Ltd. In this agreementappellant does not figure anywhere. Agreement is entered intobetween Taj India and HMA Udyog for distribution of TVchannel ‘Ten Sports’ in India. Subsequently, agreement isentered into between cable operators and sub-distributor. Asample copy has been filed of agreement dated 12.10.2002between Agny Associates and Mr. Prakash S. for thedistribution of TV channel on the cable network. Neither theappellant nor Taj India appear anywhere in the agreement.Therefore, from the perusal of the distribution agreement, sub-distribution agreement and the cable operator agreement, itbecomes very clear that appellant has given the distributionrights to Taj India for promoting and distributing the TVchannel in India on principal to principal basis. Taj Indiasubsequently has given sub-distribution rights to other parties,which have in turn entered into contract with the cableoperators for the distribution of TV channel. No evidence isavailable to show that Taj India is acting as agent of appellantfor the distribution business. Perusal of the assessment orderreveals that the AO has provided no reason why Taj Indiashould be treated as agency PE for the distribution income asper Article 5(4) of the DTAA. I am accordingly of the opinionthat Taj India is not acting as agent of appellant in India and thedistribution agreement has given exclusive right to Taj India todistribute the channel in India on its own behalf and not onbehalf of the appellant. Contracts entered into by the Taj Indiaare by virtue of Taj India being a distributor and not an agent ofappellant. In view of this it is held that Taj India does notconstitute an agency PE within the meaning of Article-5(4) ofthe DTAA in respect of distribution income. In the precedingassessment year 2003-04, my predecessor CIT(A) had similarlyset aside the findings of the AO on this issue in Para No.2.8 ofhis order dt. 26.02.2007 in Appeal No.CIT (A)XXXI/DDIT(IT)2(1)/IT-116/2006-07. I am in agreement with hisfindings on this issue. Findings of AO in this regard are setaside.” 22.The first appellate authority examined the distribution agreementbetween the assessee and Taj India, which disclosed that Taj India wasappointed as the exclusive distributor in India, Taj India being solelyresponsible for marketing and promoting the service to help drive cableoperators’ sales. Thus, the first appellate authority held that Taj Indiawas not acting as agent of the assessee but had obtained right ofdistribution of TV channel for itself. It was also noticed that Taj Indiahad independently entered into contract with other parties for the purpose of distribution of pay channel and in such contracts, the assesseedid not figure at all. Therefore, the first appellate authority held thatassessee had given distribution rights to Taj India for promoting anddistributing TV channel in India on principal to principal basis and therewas no reason why Taj India should be treated as agency PermanentEstablishment for the purpose of distribution income as per Article 5(4)of the DTAA. Therefore, the order of the assessing officer was set aside. 23.In further appeal before the Tribunal, it was held as under: purpose of distribution of pay channel and in such contracts, the assesseedid not figure at all. Therefore, the first appellate authority held thatassessee had given distribution rights to Taj India for promoting anddistributing TV channel in India on principal to principal basis and therewas no reason why Taj India should be treated as agency PermanentEstablishment for the purpose of distribution income as per Article 5(4)of the DTAA. Therefore, the order of the assessing officer was set aside. 23.In further appeal before the Tribunal, it was held as under: “17.We have carefully considered the entire gamut of factsas discussed in the impugned orders, rival submissions madebefore us, materials relied upon and the decisions relied upon.The assessee company is incorporated and registered under theMauritius Law and is also the Tax Resident of Mauritius,therefore, qua its various streams of income, India-MauritiusDTAA has to be seen. The assesee is engaged in the business oftelecasting sports channel called “Ten Sports” and forgenerating revenue, it has been collecting advertisementrevenue and distribution of channel in India. It has appointedTaj India as its advertising sales agent to sell commercial slot /spot to the prospective advertisers and other parties in India inconnection with the business of programming and telecastingof ‘Ten Sports’ Channel. As per the agreement, commission @10% of the advertisement revenue was paid to Taj India. Theassessee has claimed that, such an income is not taxable inIndia, because there is no PE in India as Taj India is not adependent agent of the assessee within the terms of Article5(4). This contention of the assessee has been negated by theLd. CIT(A) after discussing the issue in detail and holding that,there is no agency relationship between the assessee and the TajIndia qua the advertisement income within the scope of Article5(4). However, in the revenue’s appeal, the main issue involvedin ground no.1 is with regard to taxability of distributionrevenue in terms of “distribution Agreement” dated 1[st] March,2002. Under the terms of the distribution agreement, theassessee has appointed Taj India as exclusive distributor inIndia and prohibits the assessee for entering into distributionagreement with anybody else. The Ld. CIT(A) after taking noteof the ‘Distribution Agreement’ and examining various termsand clauses used therein and also taking into consideration theconduct of the parties, came to the conclusion that, Taj India isnot acting as agent of the assessee but it had obtained the rightof distribution of channel for itself and subsequently it isentering into contract with other parties in its own name inwhich the assessee is not party. The distribution of the revenuebetween the assessee and Taj India has been allocated in the ratio of 60:40 and the entire relationship is principal toprincipal basis. The Ld. CIT(A) has also noted that, there is noevidence on record to show that Taj India was acting as agentof the assessee for the distribution business in any manner. Thisfinding of fact of the Ld. CIT(A) is corroborated by the termsand conditions of the distribution agreement as well as sub-distributor agreement as placed in the paper book. Thus, such afinding of fact by the Ld. CIT(A) without there being anyrebuttal by way of any contrary material, is affirmed. Even ifwe independently examine the facts of the case vis-a-vis theprovisions contained in Article 5(4) to 5(6) which deals withthe agency PE, it can be seen that there is no agency PE of theAssessee in India. Relevant Article 5 dealing with the agencyPE is reproduced here under:- “4. Notwithstanding the provisions of paragraphs (1)and (2) of this article, a person acting in a ContractingState for or on behalf of an enterprise of the otherContracting State [other than an agent of an independentstatus to whom the provisions of paragraph (5) apply]shall be deemed to be a permanent establishment of thatenterprise in the first-mentioned State if: (i) he has and habitually exercises in that first-mentionedState, an authority to conclude contracts in the name ofthe enterprise, unless his activities are limited to thepurchase of goods or merchandise for the enterprise; or (ii)he habitually maintains in that first-mentioned State astock of goods or merchandise belonging to theenterprise from which he regularly fulfills orders onbehalf of the enterprise. 5. An enterprise of a Contracting State shall not bedeemed to have a permanent establishment in the otherContracting State merely because it carries on businessin that other State through a broker, general commissionagent or any other agent of an independent status, wheresuch persons are acting in the ordinary course of theirbusiness. However, when the activities of such an agentare devoted exclusively or almost exclusively on behalfof that enterprise, he will not be considered an agent ofan independent status within the meaning of thisparagraph. 6. The fact that a company, which is a resident of aContracting State controls or is controlled by a companywhich is a resident of the other Contracting State, orwhich carries on business in that other Contracting State(whether through a permanent establishment orotherwise) shall not, of itself, constitute either companya permanent establishment of the other.” Thus, an agent is deemed to be a PE of a foreign enterprise,if he is not independent and habitually exercises an authority toconclude contracts in the name of the enterprise unless theactivities of such person are limited to those mentioned inparagraph 4 that is, to the purchase of goods or merchandise forthe enterprise; or if he has no such authority, but habituallymaintains a stock of goods or merchandise from which heregularly delivers goods or merchandise on behalf of theenterprise. Thus, the character of an agent, who can be said tobe a dependent only if, firstly, the commercial activity for theenterprise is subject to instructions or comprehensive controland secondly, he does not bear the entrepreneur risk. It issufficient for the establishment of an agency PE that the agenthas sufficient authority to bind the enterprise’s participation inthe business activity. Here in this case, none of the conditionsas stipulated in Article 5(4) is applicable because Taj India isacting independently qua its distribution rights and the entireagreement ostensibly is on principal to principal basis asanalyzed and found by ld. CIT(A). When the entire relationshipqua the distribution revenue is that of principal to principalbasis and the Taj India is acting independently, then it movesout from the conditions laid down in Article 5(4). Thus thedistribution income by the assessee cannot be taxed in India,because Taj India does not constitute an agency PE under theterms of Article 5(4). Thus, the order of the CIT(A) is upheldand ground No.1 as raised by the revenue is dismissed.” 24.Tribunal noted that the first appellate authority, after duedeliberation, had returned a finding of fact that Taj India was not actingas agent of the assessee but it had obtained the right of distribution of thechannel for itself and subsequently, it had entered into contracts withother parties in its own name in which the assessee was not a party. Thedistribution of the revenue between the assessee and Taj India was in theratio of 60:40 and the entire relationship was on principal to principalbasis. Tribunal noted that this finding by the first appellate authority iscorroborated by the terms and conditions of the distribution agreementas well as the sub-distributor agreement. After examining therequirement of Article 5 of the DTAA to constitute agency PermanentEstablishment, Tribunal as a matter of fact held that none of theconditions as stipulated in Article 5(4) was applicable because Taj Indiawas acting independently qua its distribution rights and the entireagreement was on principal to principal basis. Therefore, it was held that the distribution income earned by the assessee cannot be taxed in Indiabecause Taj India does not constitute an agency PermanentEstablishment under the terms of Article 5(4) of the DTAA. The order ofthe first appellate authority was accordingly upheld. 25.On thorough consideration of the matter, we are in agreementwith the views expressed by the Tribunal. In fact, there is concurrentfinding of fact between both the appellate authorities on this point.Learned standing counsel Revenue has not been able to show anyperversity in such finding returned by the appellate authorities. In theabsence thereof, we see no good reason to interfere with the finding ofthe Tribunal affirming the order of the first appellate authority. 26.Consequently, we do not find any merit in the appeal. Nosubstantial question of law arises from the order of the Tribunal. Appealis accordingly dismissed. However, there shall be no order as to costs. 27.In view of the above, the other appeal being Income Tax AppealNo.1437 of 2017 is also dismissed. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Minal Parab