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challenged the action of the AO in not applying the provisions of Article 13(6) of the India-UK Treaty.

4. The brief facts of the case are that the assessee, Reuters Transaction Services Ltd., is a company incorporated under the laws of England and is a tax resident of United Kingdom. The assessee is in the business of providing Reuters Dealing 3000, which is an electronic deal matching system enabling authorised dealers in foreign exchange such as banks and other financial institutions, etc. to effect deals in spot foreign exchange with other foreign exchange dealers. The main server of the assessee is located in Geneva and the assessee has executed a Dealing Services Marketing Agreement with Reuters India Pvt. Ltd. whereby the Reuters India Pvt. Ltd. has undertaken marketing services of the assessee to subscribers in India. During the financial year relevant to A.Y. 2012-13 the assessee has earned revenue of `14,18,44,012/- from customers in India. The assessee has filed its return of income declaring Nil income. It has been claimed by the assessee that as per the provisions of Section 90(2) of the Act, it has the option to be taxed as per the provisions of Income tax or the relevant tax treaty executed by India, whichever is more beneficial to the assessee. Since it is a tax resident of UK, the assessee has opted to be taxed as per the provisions of DTAA between India and UK. The assessee further claimed that the revenue earned by the assessee from its subscribers in India are in the nature of business profit and as per Article 7 of the India-UK tax treaty business profits of a tax resident of UK are taxable in India, only if it has a Permanent Establishment (PE) in India and in such case only to the extent of profits that are attributable to the PE in India. The assessee further claimed that for the year ended 31.03.2012 it has no PE in India as contemplated under Article 5 of the DTAA and accordingly its revenue is not liable to be taxed in India in terms of the provisions of the DTAA.

Geneva constitutes an equipment PE of the assessee in India under Article 5(1) of the Treaty has not been adjudicated as the assessee has not pressed the ground taken challenging the existence of PE in India. On applicability of Article 13(6) of the tax treaty between India and UK, the DRP held that though in the alternate view of the AO the assessee has a PE in India, in view of the findings of the ITAT Mumbai "L" Bench in assessee's own case for earlier years wherein it was held that part 6 of Article 13 can be pressed into service only in the case where the existence of PE of non-resident is not in dispute. In this case the assessee company has contended that it has no PE in India, therefore following the order of the ITAT no directions are being issued to the AO on this ground of objection. Similarly, in so far as computing the income chargeable in India in the hands of the assessee, the AO has charged 20% tax in the draft assessment order instead of 10% as prescribed under Section 115A of the Act. Therefore directed the AO to verify the claim of the assessee in the light of the agreements submitted by the assessee and accordingly apply 10% tax. In so far as levy of interest under Section 234B of the Act the DRP, by following the decision of the Hon'ble Bombay High Court in the case of DIT vs. NGC Network Asia LLC (2009) 222 CTR 86, held that duty is cast on the payer to deduct tax at source, on failure of the payer to do so, no interest can be imposed on the payee assessee under Section 234B of the Act. Accordingly, directed the AO to modify the draft assessment order excluding interest levied under Section 234B of the Act. Aggrieved by the order of the DRP, the assessee as well as Revenue are in appeal before us.

the issue of taxability income. The learned A.R. further submitted that once the AO held that there is a PE in India, then the income of the assessee from revenue generated in India should be taxed under Article 13(6) of the India-UK tax treaty, but the AO has taxed the income under the provisions of Section 115A of the Act. Therefore it was submitted that once there is no dispute about the existence of PE and also the fact that the assessee has not taken any ground challenging the findings of the AO on existence of PE, then the AO ought to have computed the income under Article 13(6), but the AO has determined the income in accordance with the provisions of Section 115A of the Act which is incorrect. The learned A.R., in response to a query from the Bench that is there any change in the facts during the current year when compared to the facts already considered by the Tribunal in the earlier years, fairly accepted that there is no change in the facts, but still reiterated his argument that once the assessee has not challenged existence of PE income shall be computed in accordance with the provisions of Article 13(6) of India-UK treaty and not under the provisions of the Income Tax Act.

M/s. Reuters Transaction Services Ltd.

18. As we have given the finding that the income received by the assessee from the Indian Banks is in the nature of royalty, therefore, the other issues of fee for technical services becomes academic and we do not propose to decide the same. Further, though the assessee has not raised any specific ground on the issue of PE, however, the Ld. Counsel for the assessee has submitted that even if the Indian subsidiary of the assessee constitute PE or otherwise the assessee has PE in India in that case para 6 of Article 13 of DTAA will apply and the royalty or fee for technical services is assessed to tax in terms of provisions of Article -7 or Article -15 of DTAA. We do not agree with the contention of the ld. Counsel for the Assessee because once the receipt in question has been decided as royalty in nature then there is no need to go into the question of assessee having PE in India. Para 6 of Article-13 can be pressed into service only in the case when the existence of PE of a non resident is not in dispute. In the case in hand the assessee has not come up with the claim that the services rendered to the Indian Banks are through its PE. Rather the assessee has vehemently contended that it has no PE in India. In these facts and circumstances, the provision of para 6 of Article -13 canot be invoked in case when the receipt is found as royalty in terms of Article - 13(3) of the DTAA and assessee has not admitted any PE in India."