text:
Tax on Interest Income & commitment fees earned by DZ Bank from its Indian clients
RATHI
| Income Tax - Judiciary
Case Name : DZ Bank AG – India Representative Office Vs DCIT (ITAT Mumbai)
Appeal Number : ITA No. 1815/Mum/18
Related Assessment Year : 2014-15
Courts : All ITAT (7620) ITAT Mumbai (2174)
DZ Bank AG – India Representative Office Vs DCIT (ITAT Mumbai)
Interest Income & commitment fees earned by DZ Bank from its Indian clients could be taxed under article 11 instead of article 7 of Indian Branch under Tax Treaty:
Conclusion: Interest income and commitment fees earned by DZ Bank from its Indian clients could be taxed at the hands of Indian Branch under India Germany Tax Treaty under article 11 , and not additionally under article 7 also, but the income was taxable nevertheless, subject to the exemptions set out in and under the scheme of article 11, on gross basis.
Held: The issue raised for adjudication was whether the interest income and commitment fees etc. earned by DZ Bank from its Indian clients could be taxed in the hands of the assessee, DZ Bank AG India Representative Office under article 7 of the India German Double Taxation Avoidance Agreement or was the said income only required to be taxed in the hands of the DZ Bank AG Germany, if at all held to be taxable, under article 11 of the Indo German tax treaty. In the entirety of the case, it was clear that there was no income, other than the interest income of DZ Bank AG from its clients in India, on which tax liability under article 11 had already been discharged, taxable in the hands of the assessee bank. So far as this taxability was concerned, assessee did not have any obligations to file the income tax return under section 115A(5) as it existed at the relevant point of time. It was difficult not to miss the fact that an income, which had already been brought to tax in the hands of the assessee under a treaty provision, was being sought to be taxed again in the hands of the same assessee, in the same assessment year but only under a different provision in the same tax treaty. This approach could not be approved. Therefore, the interest income and commitment fees in the hands of the assessee bank could not be taxed additionally under article 7 of the Indo German tax treaty also. The income in question could only be taxed under article 11 but the income was taxable nevertheless subject to the exemptions set out in and under the scheme of article 11, on gross basis. It was not even AO's case that the debt claims in question were effectively connected with the PE, but at best that there was "a real relation between the business carried on by the assessee for which it received interest and processing charges abroad and activities of its representative office in India which contributed directly or indirectly to the earning of income of the assessee (i.e. DZ Bank AG, Germany)- something was much less than the threshold nexus level to trigger article 11(5) exclusion clause The existence of permanent establishment, was not really relevant for determining the issue of taxability under article 7 on the facts of the present case.
FULL TEXT OF THE ITAT JUDGEMENT
1. By way of this appeal, the assessee appellant has called into question correctness of the order dated 20th December 2017 passed by the learned Commissioner (Appeals) in the matter of assessment under section 143(3) r.w.s. 144 C(13) of the Income Tax Act, 1961, for the assessment year 2014-15.
2. The short issue that we are required to adjudicate in this appeal, as learned representatives agree, is whether, on the facts and in the circumstances of this case, the interest income of Rs 29,41,57,201 and commitment fees etc of Rs 1,98,14,938 earned by DZ Bank from its Indian clients can be taxed in the hands of the assessee before us, under article 7 of the India German Double Taxation Avoidance Agreement [(1996) 223 ITR (Stat) 130; Indo German tax treaty, in short], or is the said income only required to be taxed in the hands of the DZ Bank AG Germany, if at all held to be taxable, under article 11 of the Indo German tax treaty. That is the issue sought to be agitated by before us, though, in the course of this hearing, many other facets of the matter came up for discussions, and, having heard parties on those aspects at length, have been adjudicated upon.
3. Grounds of appeals, as set out in the memorandum of appeal- for the sake of completeness, are as follows:
1. erred in concluding that the Appellant constitutes a permanent establishment ('PE') of DZ BANK, AG Deutsche Zentral Genossenschaftsbank ('DZ BANK AGDZ')/ overseas branches, in India as per the provisions of Article 5 of the India-Germany Double Taxation Avoidance Agreement ('IG treaty');
2. erred in taxing the interest income earned by DZ BANK AGDZ/ overseas branches from foreign currency loans ('credit facilities') provided to Indian companies/borrowers at the rate of 40% (plus applicable surcharge and education cess) instead of taxing it as per Article 11 of the IG treaty at the rate of 10%, particularly when the credit facilities are not effectively connected to the alleged PE;
3. erred in taxing the fees for technical services earned by DZ BANK AGDZ/ overseas branches from credit facilities provided to Indian companies/borrowers at the rate of 25% (plus applicable surcharge and education cess) under section 115A of the Act instead of taxing it as per Article 12 of the IG treaty at the rate of 10%;
4. erred in taxing the commitment fees earned by DZ BANK AGDZ/ overseas branches from loans guaranteed by Hermes Deckung, even though the same would not be taxable in India under the provisions of Article 11 of the IG treaty as interest and in the absence of a PE in India, the same should not be chargeable to tax under Article 7 of the IG treaty.
Even assuming without admitting that commitment fees constitutes 'interest', the said income should not be chargeable to tax in India under the provisions of Article 11 (3)(b) of the IG treaty.
5. Without prejudice to the above grounds, erred in not taxing the interest income from credit facilities as per the provisions of section 115A(1) of the Act at the rate of 20%;
6. Without prejudice to the above grounds, erred in bringing to tax the entire income from credit facilities earned by DZ BANK AGDZ instead of only that which can be said to be attributable to the alleged PE in India;
7. Without prejudice to the above grounds, while bringing to tax whole of the income from credit facilities, the learned AO in the OGE to the CIT(A) order erred in not allowing expenses incurred outside India by DZ BANK AGDZ in relation to the credit facilities on account of non-furnishing of documentary evidence;
8. erred in concluding that the Appellant constitutes a business connection in India as per the provisions of section 9(1 )(i) of the Act;
9. erred in not granting credit for tax deducted at source (TDS), including credit for which the Appellant could not furnish certificates but the payments were received net of taxes;
10. erred in raising a demand, in respect of taxes already deducted at source appropriately by the deductor and, making a demand of the said taxes which is not in consonance as per provisions of section 205 of the Act.
4. To adjudicate on this appeal, only a few material facts, as culled out from material on record, need to be taken note of. DZ Bank AG, a company incorporated under the laws of Germany and having its principal place of business in Germany, is engaged in the banking business, and it has, with the permission of the Reserve Bank, a representative office in India. In terms of the Reserve Bank of India's conditions, subject to which this office was permitted, inter alia, "the representative office should function purely as a liaison office without transacting any type of banking business" and "all the expenses of the representative office should be met out of inward remittances from the bank". In effect thus, this office was only a liaison office and was not, on its own, engaged in the core business of the assessee, i.e. banking.
5. On 25th September 2014, the assessee filed an income tax return in the name of "DZ Bank AG- India Representative Office", apparently treating the India Representative Office as a taxable entity, disclosing NIL taxable income. This return was subjected to scrutiny assessment proceedings, and, in the ensuing assessment proceedings, the Assessing Officer noticed that during the relevant previous year "DZ Bank AG provided foreign currency loans to Indian companies' and "these loans were in the nature of external commercial borrowings (ECB) as permitted under the Indian Exchange Control Regulations". He further noted that "On perusal of ITS details generated in the case of the assessee it was seen that huge sums of TDS has been made on the interest paid/payable by Indian customers to the assessees". In this backdrop when the Assessing Officer probed the matter further, it was explained by the assessee that TDS on interest payable by the Indian borrowers is borne by them, and that, as per section 115A(5) of the Income Tax Act, 1961, a foreign company is exempt from furnishing a return of income in India when it only earns interest income from foreign currency loans provided to Indian companies, and the appropriate taxes have been deducted at source from the same. The Assessing Officer was, however, not content with the said explanation. He required the assessee to show cause as to why "DZ Bank India Representative Office not be considered a permanent establishment, of the head office, in India, and the interest income and any other income earned by the head office from the operations in India should not be taxed @ 40% as per the provisions of the Income Tax Act". It was explained by the assessee that under article 7 of Indo German tax treaty, only so much of the business profits of a German enterprise can be brought to tax in India as are attributable to its permanent establishment in India, that the representative assessee did not constitute PE of the DZ Bank AG inasmuch as no business activities were carried out from the same, which is a sine qua non for PE coming into existence under the basic rule, that maintenance of a fixed place of business inter alia for "any activity of preparatory or auxiliary character", which is what at best the Indian representative office is engaged in, is anyway excluded from the definition of PE, and that the Indian representative office cannot be said to a dependent agent permanent establishment (DAPE) inasmuch as admittedly it has no authority to conclude contracts on behalf of the German Bank and its branches elsewhere. The Assessing Officer, however, rejected these arguments, and, inter alia, observed as follows:
7.19 Admittedly, the assesses DZ Bank India, is a Representative Office of DZ Bank, AG, in India and is actually involved in the following activities in India on behalf of its head office:
a. DZ Bank India approaches Indian banks, financial institutions and corporates and apprises them about the products and services that DZ Bank AGDZ could offer.
b. It initiates a discussion with the potential customer.
c. DZ Bank India approaches its head office/ overseas branches with the funding opportunity,
d. DZ Bank India collects from the customers and provides the necessary information to facilitate the due diligence at the head office/ overseas
e. DZ Bank India collects and provides information in respect of the financial statements of the client, revenue projections, history and background of the company, etc for the head office/ overseas branches.
f. DZ Bank India collects and provides all additional clarification/ documentation required in a transaction by the head office / overseas branches.
g. The head office/ overseas branches examine the documents (including the financial statements) and if specific further information is required, they request the CRO of DZ Bank India to obtain such information.
h. The CRO also provides the local market opinion on the client such as rating by the local rating agencies, historical reputation of the client, declared future plans, etc. and also if there are any regulatory issues involved with such credit.
i. Where the customer has a query on the terms of the credit facility, they contact DZ Bank India.
j. DZ Bank India is also involved in discussing the terms of the credit facility on the instructions of head office/ overseas branch.
k. The CRO under a limited power or attorney may also be instructed by the head office/ overseas branches to be a signatory for the credit facility documents, as already approved by them for execution of the credit facilities.
l. Post disbursal of the credit facility, the head office/ overseas branches ascertain the reasons for the delay in repayments and interest payments as per the agreed repayment schedule through DZ Bank India, and DZ Bank India even assists in recovery where there are such delays.
7.20 Thus, the business transaction by the assessee's head office and overseas branches with its Indian clients would not be complete without the involvement and actions by its Representative Office in India, DZ Bank India. There is, therefore, a real relation between the business carried on by the assessee for which it receives interest and processing charges abroad and the activities of its Representative Office in India, which contributes directly or indirectly to the earning of the income by the assessee. Therefore, it follows that income shall be deemed to accrue/arise to the assessee in Germany from 'business connection' in India.
7.21 As far as the contention of the assessee based on DTAA is concerned, reference to the relevant provisions of Article 7 of DTAA which deal with the business profits would be necessary.
Article 7: Business profits
1. The profits of an enterprise of a Contracting States shall be taxable only in that State unless the enterprises carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
7.22 A perusal of para (1) of Article 7 shows that the profits of an enterprise of Germany are taxable in that country provided that enterprise does not carry on business through a permanent establishment (PE) in India. If the enterprise carries on business, through a 'PE' in India its profits may be taxed in India but only so much of them as are attributable to that PE. This provision is in line with sub-clause (a) of Explanation (I) to clause (i) of Section (1) of Section 9 of the Act.
7.23 The expression 'permanent establishment1 is defined in Article 5. We shall advert to Paras 1 to 3 thereof, which are relevant for our purpose and are reproduced below:
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially,-
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, including an installation or structure used for the exploration or exploitation ;
(g) a warehouse or sales outlet;
(h) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; and
(i) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities continue for a period exceeding six months.
3. An enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in connection with, or supplies plant and machinery on hire used for or to be used in the prospecting for or extraction or exploitation of mineral oils in that State.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include,—
(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to- the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
7.24 To summarize the expression 'permanent establishment' means a fixed place of business through which the business of an enterprise is wholly or partly carried on and includes within its ambit places enumerated in clauses (a) to (i) of para 2 but excludes places specified in clauses (a) to (e) of para 4, referred to
7.25 It is contended by the assessee that it is merely Representative Office solely for the purpose of acting as communication office of its head office and is covered by the exclusionary clause (e). It is emphasized that no income is received in the representative office, no business is entertained and no activity in violation of conditions prescribed by RBI is carried on there.
7.26 The moot question, however, is whether the exclusionary clause (e) of para 4 is attracted; if so, whether the assessee as a representative office would stand excluded from the meaning of the expression 'permanent establishment'. It is often difficult to distinguish between activities which have a preparatory or auxiliary character and those which have not. The decisive criterion is whether or not the activity of the fixed place of business in itself forms an essential and significant part of the activity of the enterprise as a whole. In any case, a fixed place of business whose general purpose is one which is identical to the general purpose of the whole enterprise, does not exercise a preparatory or auxiliary activity. A fixed place of business which has the function of managing even only a part of an enterprise cannot be regarded as doing a preparatory or auxiliary activity. The function of a representative office, even if it only covers a certain area of the operations of the concern which constitutes an essential part of the business operations of the enterprise, it can in no way be regarded as an activity which has a preparatory or auxiliary character within the meaning of subparagraph (e) of paragraph 4 of Article 5 of the India Germany DTAA,
7.27 Clause (e] of para 4 says that the expression 'permanent establishment' shall be deemed not to include the maintaining of a fixed place of business solely for the purpose of carrying on for an enterprise any other activity of a preparatory or auxiliary character . The assessee has relied on the dictionary meaning of the words 'auxiliary', 'Ancillary', 'Aid' and 'Prepare' in support of its contention that its representative office in India is covered by the exclusionary clause (e). It is unnecessary to refer to all of them here. Suffice it to say that the word 'auxiliary' in common English usage means helping, assisting or supporting the main activity. Therefore, the only task at hand is to ascertain whether the activities carried on in the representative office in India are only supportive of the main business or form one of the main functions of the business. In the instant case of the assessee, however, it is seen that even if some of the function of the representative office may be auxiliary character, the involvement of representative office in scouting for customers in India, giving specific inputs to the head office and its overseas branches about the prospective client and then negotiating with them, signing loan agreements and following up on delayed repayments of principal and delayed payments of interest, are all functions which play an important role in its main business. These roles of the representative office are nothing short of performing a major role in the lending business of the assessee in India and cannot be said to be work of auxiliary character. It is indeed a significant part of the main work of the head office and its overseas branches.
7.28 It follows that the representative office of the assessee in India would be a 'permanent establishment' within the meaning of the expression in DTAA. From the above discussion it can safely be concluded that so much of the profits as shall be deemed to accrue or arise to the applicant in India which are attributable to the 'permanent establishment', namely, the representative office in India, would be taxable in India even under the DTAA [UAE Exchange Centre LLC in A.A.R. NO. 608 OF 2003 dated 26-05-2004].
7.29 Further, it will also be worthwhile to consider the provisions of para (5) of Article 5 of the DTAA. The same is reproduced as under:
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person -'other than an agent of an independent status to whom paragraph 6 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State that enterprise shall be deemed to have a permanent establishment in the first-mentioned State, if this person,—
(a) has and habitually exercises in that State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise;
(b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or
(c) habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that enterprise.
7.30 One would appreciate that the provisions of the aforesaid para are the same as Explanation 2 to clause (i) of sub-section (1) of Section 9. It has already concluded while discussing Explanation 2 that the assessee, DZ Bank India, habitually exercises in India, an authority to conclude contracts for or on behalf of the enterprise at the instructions of the head office or overseas branches. DZ Bank India also habitually secures orders in India, wholly for the DZ Bank AGDZ and its overseas branches.
7.31 Thus, even if the provisions of the DTAA between India and Germany are applied to the case of the assessee, the assessee is a permanent establishment of DZ Bank AGDZ in India, and all the income earned by its head office from clients in India is taxable as its business income in India @40% + surcharge + education cess.
7.32 The Assessee vide its letter dated 21/12/2016 has submitted that during the year DZ Bank India earned interest income on overseas credit facilities provided to India clients amounting to Rs. 43,18,31,765/- which includes an amount of Rs 10,78,74,218 as interest received on loans given to Indian Companies/borrowers and Rs 32,39,57,547 as interest on loans guaranteed by Hermes Deckung and hence they are exempt from taxation in India as per Article 11 (3)(b) of India_Germany Double Taxation Avoidance Agreement. An amount of, Rs. 18,62,82,983 has been submitted by the assessee vide letter dated 9/12/2016. Accordingly, in view of the above facts and discussion, this interest income of Rs. 29,41,57,201 shall be subject to tax @40% along with surcharge and education cess.
6. The Assessing Officer further noted that the assessee has further earned a commitment fee of Rs 1,91,08,038 and agency fees of Rs 7,06,900, in connection with the loans guaranteed by Hermes Deckung, Germany. He noted the plea of the assessee that these amounts cannot be taxed in India under article 7 for want of PE, and under article 11 as these amounts are not covered by the definition of 'interest'. He was, however, of the view that as the assessee has a PE in India, and all these amounts pertain to the said PE, these amounts are taxable in the hands of the assessee as business receipts under article 7. The Assessing Officer thus proceeded to tax entire interest income, commitment fees and agency fees as income of the assessee, and, while computing taxable income, allowed a deduction of Rs 2,77,77,831 being expenses of the representative office. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee is aggrieved and is in appeal before us.
7. The hearing in this case was concluded on 20th November 2020, and the matter was refixed thereafter on 24th November 2020 in the light of, inter alia, the following show cause notice issued by us to DZ Bank AG, with a copy thereof to the parties before us:
You are hereby required to show cause as to why the income arising on account of DZ Bank AG's India Representative Office, even if any, not be excluded from income, if any and to the extent taxable, in the hands of "DZ Bank AG- India Representative Office", and brought to tax in your hands, as you are the taxable unit, in respect of any of your offices or any other form of presence in India, in terms of the provisions of the Income Tax Act, 1961, as is highlighted below by Hon'ble Supreme Court's judgment in the case of CIT Vs Hyundai Heavy Industries Co Ltd [(2007) 291 ITR 482 (SC)]:
Therefore, it is clear that under the Act, a taxable unit is a foreign company and not its branch or PE in India. A non-resident assessee may have several incomes accruing or arising to it in India or outside India but so far as taxability under section 5(2) is concerned, it is restricted to incomes which accrue or arise or is deemed to accrue or arise in India. The scope of this deeming fiction is mentioned in section 9 of the Act. Therefore, as far as the income accruing or arising in India, an income which accrues or arises to a foreign enterprise in India can be only such portion of income accruing or arising to such a foreign enterprise as is attributable to its business carried out in India. This business could be carried out through its branch(es) or through some other form of its presence in India such as office, project site, factory, sales outlet etc. (hereinafter called as "PE of foreign enterprise"). It is, therefore, important to note that under the Act, while the taxable subject is the foreign general enterprise (for short, "GE"), it is taxable only in respect of the income including business profits, which accrues or arises to that foreign GE in India.
[Emphasis, by underlining, supplied by us]
It may be clarified that the use of expression "permanent establishment" in the above context was with reference to the provisions of the Indian Income Tax Act, 1961, under which 'permanent establishment' has been assigned an inclusive definition which includes, under section 92F(iiia), "a fixed place of business through which the business of the enterprise is wholly or partly carried on". This reference to "permanent establishment" does not, therefore, prejudice your argument that you did not have a 'permanent establishment' in terms of the requirements of Indo German Double Taxation Avoidance Agreement.
This notice is being issued to you in terms of the requirements of Explanation 2 (b) to Section 153 as it exists now and in terms of requirements of Explanation 3 to Section 153 as it stood at the relevant point of time. It is further clarified that considering the requirements of the present context, in our considered view, the inclusive definition of 'person' under section 2(31) for this purpose also includes any entity on which an assessment under the Income Tax Act, 1961 is framed.
The matter is fixed for hearing, through videoconferencing on webex portal, on 24th November 2020 at 2.30 pm. The meeting ID and the password will be placed in the public domain on our official website www.itat.gov .in.
7. We have heard the rival contentions at length, perused the material on record and duly considered facts of the case in the light of the applicable legal position.
8. The first question that arises is whether the assessee before us is a taxable unit, and whether, given the fact that none of the parties has raised this issue before us and having regard to very peculiar facts of this case, we have to essentially take a judicial call on that aspect of the matter and direct that the additions impugned in this appeal may be considered, if at all taxable, in the right hands.
9. Learned counsel fairly accepts that the taxable unit can only be the foreign enterprise, DZ Bank AG, in this case, and not the 'DZ Bank AG- India Representative office' per se. He, however, seeks to rationalize the present situation by submitting that the permanent account number, under which the return in question is filed is allotted to DZ Bank AG, and, therefore in substance the present assessment is framed on DZ Bank AG. He relies upon section 292B to plead that the mistake of the income tax return having been filed in the name of 'DZ Bank AG- India representative office', if that be so, ignored. However, when asked whether the interest income earned by the DZ Bank AG was included in this return of income, his reply was in negative. In response to our question that if we are to treat this as an income tax return of DZ Bank AG, will it not result in a situation that assessment of the DZ Bank AG will reach finality with taking into account the said interest income, and the taxes withheld from those interest payments will technically become refundable to the DZ Bank AG, if so claimed, learned senior counsel did not have much to say beyond submitting that it is a hypothetical situation as no such refund is, and will be, claimed. He submits that such an approach is too technical an approach to the subject matter, and the lapse of the assessee, if at all a lapse, is an inadvertent and trivial procedural mistake which must not obstruct the path of substantial justice. Learned counsel submits that, if the foreign enterprise and its representative entity are to be treated as the same unit- as is the correct position, in substance what is being sought to be taxed is interest income under article 7 which has already been offered to tax under article 11, and this claim is patently incorrect. Therefore, in case we agree with that proposition on merits, there is no point in prolonging the agony of the foreign enterprise by further delaying the matter being decided on merits in a different set of proceedings. Learned counsel submits that section 153 cannot come into play in this case because that would be applicable only when an income is excluded from the hands of one person and sought to be taxed in the hands of some other person, but here is a situation in which DZ Bank AG- India Representative Office and DZ Bank AG are one and the same thing, have a common permanent account number and represent the same artificial juridical person. He does not share our perception that given the present context, the expression "person" can indeed be given the extended meaning as proposed by us, and argues at length on that aspect. Learned counsel then explains to us the practical problems that the assessee will have to face in the event of our adopting the proposed course of action inasmuch as fresh income tax returns will have to be filed when, in effect, there is no income other than the interest income in respect of which, by the virtue of Section 115A(5), filing of income tax return under section 139(1) is not required anyway. It is submitted that the income which has been taxed in the impugned assessment has been wrongly taxed, and it deserves to be vacated on merits in any event. We are urged to take a holistic and practical view of the matter. Learned Departmental Representative, on the other hand, does not make any specific submissions and leaves the matter to us. In any case, he is unable to bring on record anything to challenge the legal proposition that the taxable unit in India is only the foreign company, and not its PE or other constituents in India.
10. We have noted that the entire proceedings in this case proceed on the basis that the DZ Bank AG and its Indian representative office are two distinct taxable entities. So far as the interest income taxable in India under article 11 of the Indo German tax treaty is concerned, it has been contended that in view of the provisions of Section 115A (5), as it stood at the relevant point of time, DZ Bank AG was not required to file the income tax return under section 139(1) because the tax deductible under chapter XVII B was duly deducted from such income. The assessee has filed the income tax return in the name of DZ Bank- India representative office, and has not disclosed therein the amounts admittedly taxable in the hands of DZ Bank AG, Germany under article 11 of the Indo German tax treaty. By implication, therefore, DZ Bank AG and its Indian representative office are treated as two distinct taxable units or taxable entities, even though there is only one permanent account number allotted to the DZ Bank AG, which is used for filing the income tax return of DZ Bank AG- India Representative Office. That position, on the first principles, is unsustainable in law. It is only elementary that the tax subject is only the foreign enterprise and not its PE in India, though, so far as profit attributable to the PE are concerned, the same are taxable in the hands of the foreign enterprise. That is what a coordinate bench of this Tribunal, speaking through one of us (i.e. the Vice President) in the case of Dresdner Bank AG Vs ACIT [(2006) 11 SOT 158 (Mum)] has held by observing, inter alia, that "Under section 4 of the Act, it is total income of every 'person' which is taxable. Section 2(31), in turn, defines 'person' as including a 'company', which in terms of the provisions of section 2(23A), includes a 'foreign company' as well. Section 6(4) of the Act lays down that a company, unless it is an Indian company or unless it is controlled or managed entirely from India, cannot be said to be resident in India. A foreign company, which is not wholly controlled or managed in India, is therefore a non-resident so far as residential status under the Act is concerned. Section 5(2) further lays down that as far as a non-resident assessee is concerned scope of total income of such an assessee is confined to (i) an income which 'accrues or arises in India' or is 'deemed to accrue or arise in India' and (ii) an income which is received or is deemed to be received by or on behalf of such foreign company. This elementary analysis makes it clear that under the Income-tax Act, so far as foreign companies are concerned, taxable unit is a foreign company and not its branch or permanent establishment in India, even though the taxability of such foreign companies is confined to (i) an income which 'accrues or arises in India' or is 'deemed to accrue or arise in India', and (ii) an income which is received or is deemed to be received by or on behalf of such foreign company………………………. To determine income accruing or arising in India to a foreign enterprise (hereinafter referred to as 'general enterprise' or as 'GE'), therefore, we have to compute income attributable to such branch(es) in India, or other form(s) of presence in India such as office, project site, factory, sales outlet etc., (hereinafter collectively referred to as 'permanent establishment' or 'PE') of foreign enterprise" [Emphasis, by underlining supplied by us]. Subsequently in the case of CIT Vs Hyundai Heavy Industries Co Ltd [(2007) 291 ITR 482 (SC)] similar were the views of Hon'ble Supreme Court. Their Lordships also observed that "it is clear that under the Act, a taxable unit is a foreign company and not its branch or PE in India……………….. ., as far as the income accruing or arising in India, an income which accrues or arises to a foreign enterprise in India can be only such portion of income accruing or arising to such a foreign enterprise as is attributable to its business carried out in India" [Emphasis, by underlining supplied by us]. The expression "PE", as used here, is not in the strict treaty sense but it also covers any form of presence leading to taxation in source jurisdiction. A foreign enterprise may have several types of income taxable in India, including, of course, income attributable to its PE(s) in India. These different streams of income, even if that be so, apart, what is taxable unit is only the foreign enterprise. Therefore, irrespective of whether the assessee was liable to file income tax return under section 139(1) or not, once the assessee chose to file the income tax return, it would seem to us that the assessee could have filed the income tax return only for DZ Bank AG, and not for India office of DZ Bank AG, and all the income, under whichever article of the applicable tax treaty- article 11, article 7 or any other article, were liable to be disclosed therein, and the income was required to be computed in accordance with the applicable legal provision, including the transfer pricing provisions, if applicable. In the present case, though the assessee has used the PAN number as was allotted to the DZ Bank AG, it has apparently filed the income tax return in the name of DZ Bank AG- India Representative Office, the income tax return is verified by the India Representative Officials and created an artificial demarcation of income of the HO and Branch by excluding the interest income received by DZ Bank AG directly and taxed under article 11, and declaring that the assessee, styled as DZ Bank AG- India Representative office, did not have any taxable income. The Assessing Officer has categorically noted that the assessee has filed an income tax return disclosing NIL income- something which is ex facie incorrect, if DZ Bank AG and DZ Bank AG- India Representative Officer were indeed to be treated by the assessee as one taxable entity, as the DZ Bank AG admittedly has paid taxes on interest income under article 11.
11. It is, however, equally true, as learned senior counsel rightly points out, that in the event of the issue regarding taxability of the impugned income under article 7 being decided in favour of the assessee, the filing of income tax return in the name of DZ Bank AG- India Representative Office will end up being nothing but a seemingly inadvertent error without any consequences in terms of loss of revenue, and we must, therefore, adopt a pragmatic approach on the issue, and ensure that our actions do not subject assessee to any avoidable inconvenience- particularly when the income tax department has not really objected to the stand of the assessee at any stage, and when there is no loss to the revenue in terms of the basic tax liabilities. Clearly, the mistake is not of the assessee alone. We will infringe neutrality if we are to do anything which helps revenue make out a new case at this stage or which puts the assessee worse off as a result of his coming in appeal before us. We are alive to these concerns, and we were also alive to these concerns while raising the issue in question, but it is equally important to us that if we are to uphold any part of taxability impugned in appeal before us, we must not do so in the name of an assessee which is not, and cannot be, a taxable unit at all. Of course, in the event of our holding that no part of the income brought to tax in the impugned assessment is sustainable in law, the aspect as to in whose hands it could have been taxed will be rendered academic anyway. We, therefore, accept learned senior counsel's suggestion to take a call on taxability, as impugned in appeal before us, on merits first. Today, when ease of doing business, demystification of tax system, and an emphasis on catching tax evaders rather than getting bogged down to the technicalities, are the key mantras and top priorities of all the organs of the State, we cannot also be hyper pedantic in our approach. It is, therefore, essential to first examine the taxability of amounts brought to tax in the assessment before us, because unless there is any real of loss of revenue on that count, all these issues with respect of filing of tax returns disclosing this income in the hands of correct entities are purely academic delights. It is also important to understand that once we appreciate the fundamental position that the foreign enterprise and its representative office in India are one and the same thing, so far taxation of income in India is concerned, what essentially follows is that the income being sought to be taxed under article 7, on net basis, in the impugned assessment, has already been taxed in the hands of the same assessee under article 11, on gross basis, and that aspect of the matter has reached finality. It is also not in dispute that in terms of the provisions of Section 115A(5), as they then stood, the assessee did not have obligation to file any income tax return in respect of the said taxability. Viewed thus, the assessee may not be at fault, on that score, on technicalities either. Coming to the substance of the matter, we find that what has already been taxed, as such, under article 11 is entire interest revenue relatable to India operations of DZ Bank AG, and what is now being sought to be taxed, under article 7, is the profit element in respect of these interest revenues received by DZ Bank AG relatable to its India operations. When we take note of the fact that the DZ Bank AG- India Representative Office is not a taxable unit, and the taxable entity is only DZ Bank AG, it is so glaring that same income is now being sought to be taxed, under article 7, in the hands of the assessee which has already been taxed in the hands of the assessee, under article 11, in the same assessment year under the same tax treaty. That is clearly, to put it mildly, incongruous on the first principles, and, as we will see a little later in our analysis, simply contrary to the scheme of taxation in article 7 and article 11. Be that as it may, let us examine the broader question about taxability of the amounts in question, in terms of the treaty provisions, in the hands of the assessee. We may add, at the cost of stating the obvious though, that the provisions of the domestic law come into play, by the virtue of provisions of Section 90(2) of the Income Tax Act, 1961, and, therefore, if case of the Assessing Officer fails on the treaty provisions, there is no need to examine the same in the light of the provisions of the domestic tax law.
12. As the fundamental issue in appeal before us is taxation of interest income under article 7 of the Indo German tax treaty, let us begin by looking at the provisions of Article 7 first. The article is being reproduced below for ready reference:
ARTICLE 7- BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make, if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions, expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, and according to the domestic law of the Contracting State in which the permanent establishment is situated.
4. Insofar as in a Contracting State and in exceptional cases the determination of the profits to be attributed to a permanent establishment in accordance with paragraph 2 is impossible or gives rise to unreasonable difficulties, nothing in paragraph 2 shall preclude the determination of the profits to be attributed to a permanent establishment by means of either apportioning the total profits of the enterprise to that permanent establishment or estimating on any other reasonable basis; the method of apportionment or estimation adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.
13. As is glaring from a plain reading of the above provision, under article 7(7), where profits sought to be taxed under article 7 include any item of income which is dealt with separately in other articles of the Indo German tax treaty, article 7 will yield to those specific provisions in respect of that income. That treaty approach is in consonance with the well settled principle of law contained in the Latin maxim generalia specialibus non derogant, i.e. general provisions do not override the specific provisions. Quite clearly, therefore, when a particular type of income is specifically covered by a treaty provision, the taxability of that type of income is governed by the specific provisions so contained in the treaty. Of course, even in the scheme of taxability of such specific incomes under the treaty provisions, as we will see a little later, the situations are specified in which the taxability under those specific provisions cease to come into play, and the taxability can shift to the general provisions of article 7.
14. The question then we must ask ourselves before embarking upon examining taxability of an income under article 7 is whether such an income can be taxed under any other specific provisions of the treaty, and, if so, whether there any situations in those specific provisions of the treaty which provide for taxation of the said income under article 7. There is no dispute that what has been earned by the assessee bank from Indian clients is in the nature of 'interest' income, and that article 11 has specific provisions for taxation of interest income, in the hands of a resident of one contracting state, from the other contracting state. We must, therefore, deal with the provisions of article 11, and examine the scheme of taxability of interest income in the hands of the assessee before us.
15. Let us, therefore, move on to deal with, and examine, the taxability of interest income under article 11. The related treaty provision is set out below for ready reference:
ARTICLE 11- INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraphs 1 and 2—
(a) interest arising in the Federal Republic of Germany and paid to the Government of the Republic of India, the Reserve Bank of India, the Industrial Finance Corporation of India, the Industrial Development Bank of India, the Export-Import Bank of India, National Housing Bank and Small Industries Development Bank of India shall be exempt from German tax;
(b) interest arising in the Republic of India and paid to the Government of the Federal Republic of Germany, the Deutsche Bundesbank, the Kreditanstat fur Wiederaufbau or the Deutsche Investitions-und Entwicklungsgesellschaft (DEG) and interest paid in consideration of a loan guaranteed by HERMES-Deckung shall be exempt from Indian tax.
4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a land or political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
16. There cannot be, and there is no, dispute that interest income is specifically covered by article 11 which, inter alia, provides that "interest income arising in a contracting state and paid to a resident of the other contracting state may be taxed in the other contracting state" and restricts the taxability of such interest income, in the cases in which recipient of the interest income is beneficial owner thereof, to 10% of the gross amount of interest. There is also no dispute that the interest revenues relating to the India operations of the DZ Bank AG have been offered to tax under article 11, and the matter has reached finality as such. In the assessment order itself, that aspect of the matter has been categorically noted by the Assessing Officer.
17. Clearly, therefore, the interest income is taxable on gross basis, in the source jurisdiction- subject to, of course, certain exemptions which are not relevant in the present context as on now. We will deal with one of these exemptions a little later, as the same is relevant in the context of examining Assessing Officer's case on taxation of commitment fees.
18. Coming back to the taxation of interest under article 11, the exception to this scheme of taxability of interest is set out in article 11(5) above. As is so set out in this provision, unless beneficial owner of interest, resident in a contracting state, i.e. the foreign enterprise, "carries on business in the other contracting state in which the interest arises, through a permanent establishment situated therein" and unless "debt claim in respect of which the interest paid is effectively connected with such permanent establishment", the exclusion clause under article 11(5) will not come into play.
19. Let us in the light of the provisions of article 11(5), revert to the facts of this case.
20. As a plain reading of the assessment order would show, it is not even case of the revenue that the business of DZ Bank AG is carried on through its India representative office, but that there is "a real relation between the business carried on by the assessee for which it receives interest and processing charges abroad and activities of its representative office in India which contribute directly or indirectly to the earning of income of the assessee (i.e. DZ Bank AG, Germany)". One has to understand the subtle distinction, as the Assessing Officer has himself so well identified in the assessment order, between carrying on business of banking vis-a-vis carrying on activities which contribute directly or indirectly earning of income by the banking business. The case of the revenue authorities is best confined to the latter category, but then, even if that be a correct claim, that can not be reason enough to invoke exclusionary clause in article 11(5).
21. Under article 5(4)(e), on a somewhat parallel note, even when an assessee maintains a fixed place of business but that place is so maintained solely for the purpose of an activity or preparatory character, the maintenance of such a place of business does not amount to a permanent establishment, and, therefore, to taxation of business profits under article 7. In other words, therefore, even if there is "a real relation between the business carried on by the assessee for which it receives interest and processing charges abroad and activities of its representative office in India which contribute directly or indirectly to the earning of income of the assessee", as is stated in the assessment order, that relationship per se will not make it taxable in India.
22. It is also important to bear in mind the fact that the exclusion clause under article 11(5) will be triggered only when the twin conditions that the foreign enterprise carried on business in the source jurisdiction and that the debt claim being effectively connected with the permanent establishment are satisfied. So far as the debt claim being effectively connected with the PE is concerned, that cannot come into play only merely because the PE had a supporting role in creation of the debt claim. Unless a debt claim is part of the assets of the PE or income arising therefrom can be said to be income of the PE, it cannot normally be treated as effectively connected with the PE. In any case, the Assessing Officer has not brought on record any material to establish, or even indicate, that the debt claim is effectively connected with the PE, save and except for the supporting services rendered by the Indian Representative office in connection with dealing with that debt claim but then rendition of service by the PE, in connection with a debt claim, by itself would not make the debt claim effectively connected with the PE. What essentially follows is that unless the foreign enterprise, i.e. DZ Bank AG Germany, carries on business through the permanent establishment in India, even if there be any, interest income earned by the foreign enterprise, even if earning of the said income is on account of a significant contribution from the activities of such a permanent establishment, cannot be taken out of taxability under article 11(5). Clearly, therefore, the conditions laid down under article 11(5) are not satisfied on the facts of this case, and, the entire interest income, therefore, is required to be taxed under article 11. For this reason alone, the interest income cannot be brought to tax under article 7 because the condition precedent for an interest income being brought to tax under article 7, i.e. fulfilling the twin conditions set out in article 7, are not satisfied.
23. On a conceptual note, there can perhaps be situations in which an interest income from India, in the hands of a foreign enterprise, could be a combined fruit of business carried on by the foreign enterprise outside India, as also in India by the virtue of supporting services provided by its representative office in India. Unless the conditions set out in article 11(5) are not satisfied, as in this case, there cannot be, in the light of preceding discussions, any occasion to take such interest out of the ambit of article 11, and, when entire interest revenues are taxable under article 11, nothing survives for taxation, or is permitted to be taxed, under article 7.
24. In certain situations, the fruits of services rendered by the Indian liaison office to the foreign enterprise, could at best be taxed by making an ALP adjustment to free services rendered by the Indian liaison office. The line of reasoning, in support of this proposition, could be as follows. The domestic law definition of the expression "enterprise" under section 92F(iii) includes "a permanent establishment" which, for that purpose and as further defined in section 92F(iiia), includes "a fixed place of business through which the business of the enterprise is wholly or partly carried on". Therefore, even when business of a foreign enterprise is partly, no matter even if that part be relatively insignificant given the overall scheme of business, carried on through its fixed place of business in India, such an establishment could qualify to be a "permanent establishment" for the purposes of the transfer pricing regulations. There is also a school of thought that whatever be the treaty protection under section 90, such a treaty protection does not extend to transfer pricing regulations. As noted by a coordinate bench of this Tribunal, in the case of Shell Global Solutions BV Vs DDIT [(2016) 75 taxmann.234 (Ahd)], "the profit adjustment mechanism, envisaged in tax treaties, do not deal with supra national income determination, and, therefore, the provisions of tax treaties cannot be seen as restricting, or overriding, domestic law mechanism on this aspect". It is not even in dispute that India representative offices of foreign enterprise do perform certain services which are part of the business activities, even though such services are at best preparatory and auxiliary activities. As a corollary to this legal and factual position, a suitable arm's length price adjustment for the free services rendered by the Indian office to the foreign enterprise could probably be in order. Such an ALP adjustment could factor for the functions performed, assets employed and the risks assumed by the Indian office. Undoubtedly, in terms of the Reserve Bank of India restrictions, the representative office functions purely as a liaison office "without transacting any type of banking business" but then the source of income in such a situation will be from the services rendered by 'an enterprise" to its 'associated enterprise', and, in terms of the mandate of section 92, "any income arising from an international transaction shall be computed having regard to the arm's length price". The RBI restrictions are on carrying on of banking business by the India representative offices, but these offices can, and admittedly do, carry on economic activities nevertheless, and it is as a result of these economic activities, ALP adjustments could possibly be made.
25. However, when we put the above propositions to the learned senior counsel, he vehemently opposed the same. His first objection was that such a direction, if made, will broaden the scope of the appeal because the issue regarding ALP adjustment is not even made out by any of the authorities below, and by directing the same, or even obliquely suggesting the same, we will end up enlarging the scope of this appeal. His second objection was that it is incorrect to proceed on the basis that the treaty provisions donot restrict the application of transfer pricing provisions, and he relied upon his analysis about the scope of article 9 with respect to 'associate enterprise'. His third point was that when profits of the liaison office are not taxable in India, there cannot be any question of ALP adjustment with respect to so called free rendition of services by the Indian representative or liaison office to the foreign enterprise. His last point was that when what is to be eventually taxed in the hands of the foreign enterprise in India can never exceed the receipts of the foreign enterprise from India, and when entire receipts on account of interest are taxed in the hands of the foreign enterprise, under article 11, there cannot be further attribution of income on account of ALP adjustment in respect of related services. The fact that this income is taxed on the gross basis, according to learned counsel, does not really matter, because so far as this aspect is concerned, we are concerned about the fact of taxation per se and not the modalities of taxation. Learned Departmental Representative, on the other hand, relies upon his stand that at least some income must be attributed to the operations of the India representative office.
26. We see merits in the stand of the learned senior counsel for a very short reason. It is an undisputed fact that the entire related interest income has been brought to tax in the hands of the foreign enterprise, even though on gross basis under article 11. In case any income is brought to tax on account of ALP adjustment, and bearing in mind the fact that such an income will also be relatable to earning the same interest income, it will indeed result in a situation that for revenue of 'x' amount earned from India, what will become taxable in India will be an amount more than 'x' amount- something which is clearly incongruous. The taxable amount in a tax jurisdiction cannot, under any circumstances, be more than the entire revenue itself in that jurisdiction. In this view of the matter, even an income on account of ALP adjustment for free rendition of services by the Indian representative office to the foreign enterprise itself- even if that be treated as an associated enterprise and a hypothetically independent entity, in the cases of banks where entire interest revenues are taxed on gross basis, is ruled out. In this view of the matter, we see no need to deal with the other issues raised in learned senior counsel's defence, and leave those issues open for adjudication in the appropriate cases.
27. In view of the above legal analysis, once entire interest revenues earned in India in the hands of the foreign enterprise is taxed in its hands under article 11- as is the undisputed position in this case, nothing survives for taxation under article 7, and, given the fact that entire related revenues are taxed in the hands of the assessee on gross basis under article 11, directly or indirectly, nothing more than entire business receipts can be brought to tax in India. In any case, under the scheme of taxability in article 7 and by the virtue of specific provisions of article 7(7), as long as an income is taxable under any other specific provisions of the treaty, [such as article 8 (shipping and air transport business income), article 10 (dividends), article 11(interest), article 12 (royalties and fees for technical services), article 13 (capital gains)], and unless it is excluded from the operation of such specific provisions [such as under article 10(4), article 11(5) , article 12(5)], it cannot be taxed under article 7.
28. It is also important to bear in mind the fact that, as we have indicated earlier as well, that the case of the revenue proceeds on the fallacy that Indian representative office of DZ Bank AG and DZ Bank AG are two distinct entities, and that is apparently conceptual justification for accepting taxability of the entire related interest income in the hands of the DZ Bank AG on gross basis under article 11 and then seeking to tax profits relating to earning of such income in the hands of DZ Bank AG- India Representative Office, under article 7. It is only a corollary of the unambiguous position that the DZ Bank AG and DZ Bank India Representative Office are only one taxable unit, that the same income cannot be taxed in the hands of the same assessee twice- once under one article of the treaty i.e. Article 11, and then under another article of the treaty, i.e. Article 7. The scheme of taxability under article 7 and article 11, does not visualize, or permit, such incongruous situations.
29. That leaves us with the taxability of commitment fee of Rs 1,91,08,038 and agency fees of Rs 7,06,900. So far as these receipts are concerned, the Assessing Officer, in paragraph 9.1 of the assessment order, has noted the claim of the assessee that these were in connection with a loan guaranteed by HERMES-Deckung, Germany, and for that reason not taxable under article 11(3)(b) of the Indo German tax treaty. While he did not dispute the claim of the assessee that these amounts these amounts are in the nature of interest, and as such eligible for exemption under article 11(3)(b), he rejected the claim for the short reason that "it has been held that the assessee is a permanent establishment of DZ Bank AG in India, and all the income earned by the head office from clients in India is taxable as its business income in India". That reason is clearly incorrect. As we repeatedly emphasized, the DZ Bank AG and DZ Bank AG- India representative office are one and the same thing so far as taxation in India is concerned. These payments to DZ Bank AG were subject matter of remittances by Indian clients to the DZ Bank AG. If these were not taxable at that stage, there is nothing further by way of DZ Bank India Representative Office where the same can be taxed. The very approach of the Assessing Officer proceeds on gross misconception of facts. In any event, when principal transaction (i.e. interest income in question) itself does not lead to taxable income in India, a transaction subsidiary thereto (i.e. commitment fees and agency fees relatable thereto) cannot result in an income taxable in India either. We have taken note of the fact that what are termed as commitment charges and agency fees are in fact integral part of the loan arrangements, relatable to the same loan, and part of consideration for the same loan having been extended by DZ Bank AG to India. Unless there is something in a tax treaty to indicate to the contrary, as noted in the case of Hindalco Industries Ltd Vs ACIT [(2005) 94 ITD 242 (Mum)], by a coordinate bench of this Tribunal, subsidiary transaction takes colour from the principal transaction. The coordinate bench had noted that "……………. . when principal transaction is such that it does not generally give rise to taxability in the source country, the transaction subsidiary and integral to such a transaction also does not give rise to taxability in the source country. In other words, the subsidiary and integral transactions have to take colours from the principal transaction itself and are not to be viewed in isolation". In any event, article 11(4) defines "interest" "as used in this Article means income from debt-claims of every kind" [emphasis, by underlining, supplied by us], in most exhaustive manner and covering all income from a debt claim. The commitment fee and agency fee clearly fit in this description, and nothing to the contrary has been even brought to our notice by the learned DR or in the material on record.
30. In the light of the above discussions, as also bearing in mind entirety of the case, it is clear that, on the facts and in the circumstances of this case and in law, there is no income, other than the interest income of DZ Bank AG from its clients in India, on which tax liability under article 11 has already been discharged, taxable in the hands of the assessee bank. So far as this taxability is concerned, the assessee did not have any obligations to file the income tax return under section 115A(5) as it existed at the relevant point of time. It is difficult not to miss the fact that we are looking at a situation in which an income, which has already been brought to tax in the hands of the assessee under a treaty provision, is being sought to be taxed again in the hands of the same assessee, in the same assessment year but only under a different provision in the same tax treaty. We cannot, and donot, approve such an approach. The impugned demands are, thus, also devoid of legally sustainable merits from this point of view as well. We, therefore, uphold the plea of the assessee against taxability of interest income of Rs 29,41,57,201 and commitment fees etc of Rs 1,98,14,938, in the hands of the assessee bank, additionally under article 7 of the Indo German tax treaty also. That finding is, however, without prejudice to the taxability of the interest income under article 11 of the Indo German tax treaty. We make it clear that the income in question could only be taxed under article 11, and not additionally under article 7 also, but the income is taxable nevertheless, subject to the exemptions set out in and under the scheme of article 11, on gross basis.
31. Given our line of reasoning, as above, it is wholly academic issue as to whether or not the assessee had a permanent establishment in India, because PE or no PE, the debt claim in question could not be said to be effectively connected to the alleged PE, and, therefore, neither the exclusion article 11(5) could have been triggered, nor the taxability under article 7 could not have come into play. It is not even Assessing Officer's case that the debt claims in question are effectively connected with the PE, but at best that there is "a real relation between the business carried on by the assessee for which it receives interest and processing charges abroad and activities of its representative office in India which contribute directly or indirectly to the earning of income of the assessee (i.e. DZ Bank AG, Germany)- something is much less than the threshold nexus level to trigger article 11(5) exclusion clause. The existence of permanent establishment, in the light of our analysis of legal position, is not really relevant for determining the issue of taxability under article 7 on the facts of the present case.
32. In view of our detailed findings above, the question that we had raised on our own, with respect to the right hands in which impugned demands could be brought to tax, is rendered infructuous, and it does not call for our adjudication as on now and in this case. Suffice to say that the tax demands raised in the impugned assessments, for the detailed reasons set out above, are wholly unsustainable in law, and it is, therefore, wholly academic question as to, if at all these were demands could be lawfully raised, whether these demands could have been lawfully raised in the impugned assessment or whether separate proceedings were required to be initiated in the hands of the DZ Bank AG. For this reason, we also do not see need to deal with the scope of Section 153 on the facts of this case, as also the question whether, given the present context, appellant before us could be treated as a 'person' in the inclusive definition of Section 2(31) under the Income Tax Act, 1961. All these issues are rendered academic in the present situation.
33. In the result, the appeal is allowed in the terms indicated above. Pronounced in the open court today on the 04 day of December, 2020.
Tags: DTAA, ITAT Judgments
Name: RATHI
Qualification: CA in Job / Business
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Location: Mumbai, Maharashtra, IN
Member Since: 06 Feb 2019 | Total Posts: 58
No income tax on receipt of reimbursement of software license fees from Indian subsidiary
SC: HC can entertain writ against Sec 16(2) Order of Arbitrator only in exceptional cases
GST Authorities can initiate inquiry u/s 70 collaterally with proceedings u/s section 6(2)(b)
No service tax on consignment agency services under clearing & forwarding agent service
No revision on mere suspicion of likely escapement of income
Section 14A disallowance not sustainable if AO fails to records satisfaction about correctness of claim of assessee
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The April poppy making workshop at Market Hall Museum.
The Warwick Poppies Project is continuing to build up its collection of handmade poppies thanks to the help of monthly workshops.
Every month the Market Hall Museum in Market Place, hosts poppy making workshops. The workshops are held to add to the Warwick Poppies 2018 project collection.
The project aims to collect thousands of poppies to create a fitting community tribute to commemorate 100 years since the end of the First World War.
On Wednesday (April 4) residents turned up to the museum to make poppies.
A spokesperson from Warwick Poppies 2018 said: "It was another great afternoon workshop at the museum.
"We had a fabulous wreath given to us which was all hand sewn by Cathy Jones, and it's stunning.
Cathy Jones with her handmade wreath.
"She used her own design and she is now about to make a duplicate.
"A huge bag of poppies were also collected today, not only from the museum, but also from another workshop, held this morning at the Oddfellows Hall in Leamington.


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Officials Confirm Tornado Touched Down In Berks County, Ripping Apart Homes And Shattering Car Windows
By Greg Argos May 28, 2019 at 11:15 pm
Filed Under:Local, Local TV, Morgantown news
MORGANTOWN, Pa. (CBS) — A tornado touched down in Berks County Tuesday afternoon, the National Weather Service confirms. One neighborhood suffered heavy damage.
It was a terrifying sight as severe weather struck Morgantown. Nearly a dozen homes were ripped apart, trees were uprooted and car windows were shattered.
"It's a tornado right outside of our house. Look at the funnel!" one woman said.
Multiple viewer videos showed what appeared to be a tornado touching down on Lexington Way shortly after 6 p.m. Tuesday.
Morgantown was one of the hardest hit towns in the area. By 9 p.m., emergency workers and neighbors, many without power, surveyed the damage and boarded up holes.
"Something hit the corner of the car and it was really loud," one resident said.
Police On The Hunt For Suspect That Sexually Assaulted Woman In North Wildwood
"So much damage in the house, it's leaking all over," one woman said.
And despite the destruction, Caernarvon Township Police Department Chief John Scalia says the folks in this town are counting their blessings as there were no reported injuries.
"When you drive around, see the destruction, you realize how lucky we are nobody was hurt," Scalia said.
The area is not out of the woods yet. More severe weather could strike Wednesday.
Greg Argos
More from Greg Argos

redpajama_set_name: RedPajamaCommonCrawl


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NRL Grand Final tickets to go on sale
NRL.com
Fri 18 Jul 2014, 12:17 PM
Nearly 10,000 tickets for this year's NRL Telstra Premiership Grand Final will be priced below $100, the NRL announced today.
And a family of four will be able to see the biggest match of the year for as little as $190.
Head of Commercial, Paul Kind today announced a price freeze on family, silver and bronze tickets for the NRL Telstra Premiership Grand Final at ANZ Stadium on Sunday 5 October.
Bronze tickets will range in price from $50 for juniors to $80 for adults.
Silver tickets will be priced from $95 for juniors to $165 for adults.
"There will be 30,000 tickets available in the more affordable silver and bronze categories of seating," he said.
Mr Kind said silver and bronze family tickets will actually be reduced in price by $5 compared with last year with a bronze family ticket costing $190 and a silver family ticket $420.
"It means a family of four will be able to see the Grand Final for less than $50 per person," he said.
"This is great value for the biggest rugby league match of the year, especially when you consider there will also be some fantastic entertainment before kick off as well."
Mr Kind said the diamond category tickets, priced at $380, would be sold mainly to corporate customers.
Gold tickets will be priced at $245.
"This is the premium event of the year so we have a wide price range to cater for every supporter group," Mr Kind said.
"Naturally we would love to have more tickets available for all categories, including families, but this is a premium event with huge demand from all sectors," he said.
Mr Kind said tickets would go on sale through Ticketek to ticketed club members from 10am on Tuesday 22 July and to the general public from Thursday 31 July.
2014 Grand Final Ticket Prices
Diamond: $380 (Adult).
Platinum: $310 (Adult).
Gold: $245 (Adult), $230 (Concession), $215 (Junior), $705 (Family).
Silver: $165 (Adult), $120 (Concession), $95 Junior, $420 (Family).
Bronze: $80 (Adult), $60 (Concession), $50 (Junior), $190 (Family).
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New TV deal for BDO World Championship likely to be announced as early as today
Picture: David Gill
A new television deal for the BDO's World Championship could be announced as early as today, with a press statement regarding the tournament to be released before the end of this week.
Following the BDO's AGM, which was held at the Village Hotel in Walsall last Sunday, rumours have circulated that British free-to-air broadcaster Channel 4 is in line to snap up coverage of the 2017 staging of the organisation's flagship event.
Chairman of the BDO, Sue Williams, who it has been reported received 58 out of 66 votes to stay on the organisation's board during the AGM, told Darts Weekly on Sunday evening: "There will be a press statement made regarding the World Championship this week."
As we went to press last night, the BDO had yet to release a press statement, but one would assume it will be announcing a TV deal has been agreed for the tournament.
In December last year, the Daily Mail reported that the BBC were going to axe its coverage of the BDO World Championship after the 2016 staging of the tournament in January.
And in early February it was announced that the broadcaster declined to renew its contract with the BDO, thus ending a 38-year relationship between the two.
"A statement about next year's World Championship will be made this week"
At the same time, the BBC had struck a deal with the PDC to screen the inaugural Champions League of Darts, which takes place in Cardiff next month.
The two-day event will be the first PDC tournament to be shown on the BBC, while for the BDO it has left them scrambling to find a new broadcaster to screen its biggest tournament of the year.
The rumour linking the BDO with the Channel 4, which has been circulating since Sunday, is not the first time the two have been connected together with a TV deal in mind.
Back in April reports suggested that Channel 4 were in talks to broadcast the BDO World Championship next year, while BT Sport and Dave were also believed to have been interested.
BT Sport shared coverage of the tournament with the BBC in 2015 and 2016, while Dave stepped in at the last minute to broadcast the World Trophy in May this year.
Whether Dave has the resources to dedicate itself to showing nine days of uninterrupted coverage for the BDO World Championship remains to be seen, but if Channel 4 were to strike a deal with the BDO then they could show some of the sessions on their sister channels More4 and E4.
Author Love The Darts StaffPosted on August 12, 2016 August 15, 2016 Categories News
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What is the difference between a Philippine passport and a travel document issued by the Philippine government?
What is the difference between passport and travel document?
What is a travel document Philippines?
Can I use travel document instead of passport?
What are the different types of Philippine passport?
What are the 3 type of travel documents?
What is considered travel document?
What is travel document number in Philippine passport?
What is proof of urgent travel?
What is the importance of travel documents?
Can I travel with travel document?
What is the difference between re entry permit and travel document?
Where can you travel with travel document?
What is the difference between regular and official passport?
What is the difference between official passport and standard passport?
What is the difference between ordinary passport and official passport?
A travel document is allowed only for applicants who cannot be issued a Philippine passport and have an emergency travel to the Philippines due to medical or legal reasons or death in the family. … A travel document is valid for 30 days from issuance and can only be used one-way to the Philippines.
The difference between a Passport and a Travel Document is that Passport is an official document identifying the traveler, his/her nationality and necessary authorization to travel, while a Travel Document is a temporary document being issued in place of Passport especially in situations where the Passport may have …
A travel document is a certification or identifying document containing the description and other personal circumstances of the bearer, which is issued in lieu of a passport and valid for one-way, direct travel to the Philippines. It may not be used for travelling to other destinations.
ЭТО ИНТЕРЕСНО: Are marriages in Thailand legal?
You need to remember that travel documents do not replace passports. USCIS issues three different types of travel documents: Re-entry Permits. Advance Parole Documents.
There are three types of Philippine passports issued by the Department of Foreign Affairs. These are currently designated by the colors maroon (regular), red (official), and dark blue (diplomatic).
The most basic forms of travel documents are passports, passport cards, and arrival/departure records. These required documents allow U.S. citizens to travel abroad and re-enter the country legally upon return. Arrival/Departure records are used for non-citizens entering the country temporarily.
Here are some examples of acceptable Canadian government-issued identification documents: passport. … immigration documents issued to foreign nationals (e.g., Work Permit, Study Permit, Visitor Record, Temporary Resident Permit, Refugee Approved Status) Canadian military identification.
The Passport Travel Document Number
You can find it in the top right-hand corner of the passport. It's a 9-digit number, and no two passports have the same number.
Examples include a death certificate, statement from the mortuary, or letter from the hospital. The translation does not need to be notarized. Get proof that you are traveling internationally in the next 72 hours (or 3 business days) such as an itinerary or airline ticket.
Travel documents are important because they allow you to both enter a foreign country and more importantly re-enter your home country. Without the proper travel documents you will end up not being able to leave your home country or even worse could be trapped in another country until you can get replacement documents.
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What documents do I need to travel? You need to get a Refugee Travel Document from Passport Canada. It is recognized in all countries as a valid travel document. However, you cannot use it to travel to the country that you are a citizen of or the country of claimed persecution.
A Reentry Permit is a travel document that looks similar to a passport and can function like a passport. Lawful permanent residents or conditional permanent residents who plan to travel outside the United States for more than one year, but less than two years, may apply for a Reentry Permit.
However, this does not mean that you can visit every country as you wish, there are only a handful of countries where you can go visa-free (or at all) with refugee travel documents.
Refugee Travel Document Visa Free Countries.
Cyprus Italy Slovakia
Czech Republic Liechtenstein Spain
Denmark Luxembourg Sweden
Finland Malta Switzerland
Official Passport: Official passport is issued to employees or officials of the U.S. government traveling abroad for any official purpose. … Passport Card: This is a Variation of the Regular Passport that can be used same as regular passport, but with certain restrictions.
The fundamental difference among standard and official visa is that each Nigerian has the privilege to apply for Standard Passport while just government officials have the right to apply for the latter.
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Ordinary Passport (Dark Blue) is issued to ordinary citizens for ordinary travel, such as for vacation, study and business trips (36 or 60 pages). … Official Passport (White cover) is issued to individuals representing the Indian government on official business.


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Which Section Of This Article Was Written By An AI Chatbot?
Are we using artificial intelligence with ethical intelligence? Take a look here.
NurPhoto via Getty Images
Artificial intelligence can enrich our lives or present trouble. Consider, for example, how AI can deepen our understanding of ethics, the study of conduct and character.
I asked a popular new AI chatbot, ChatGPT, "In 200 words or less, what are three things that get in the way of doing the right thing?" I also answered the question myself. Here are the results. See if you can guess which one the AI program wrote.
Three things that get in the way of doing the right thing: response # 1
Challenging indeed
There are many factors that can get in the way of doing the right thing, but here are three common ones:
Self-interest: Sometimes, we may be faced with a choice between doing what is right or doing what is in our own best interest. This can be especially true when the right thing is inconvenient or involves some sort of sacrifice on our part.
Fear: Fear can be a powerful motivator, and it can sometimes prevent us from doing the right thing. We may be afraid of the consequences of taking a stand or speaking out, or we may be afraid of failure or rejection.
Lack of understanding or empathy: It can be difficult to do the right thing if we don't understand the perspective or needs of others. Without empathy, it can be hard to see beyond our own narrow self-interest and consider the greater good.
Three things that get in the way of doing the right thing: response #2
Overcoming an obstacle
Three things that can get in the way of doing the right thing are:
Fear. Suppose you're in a public place and overhear two colleagues discussing confidential information about a patient. You'd like to encourage them not to do this but worry they'll get angry at you. Fear can prevent you from doing the right thing, which here would mean speaking with your colleagues privately about your concerns.
Foul mood. Sometimes we wake up in a bad mood. Maybe we didn't get enough sleep or we're having relationship problems. Whatever the cause, being in a bad mood can make it harder to treat others with respect, which is a crucial ethical obligation.
Focus on short-term benefits. Placing great value on maximizing profits or stakeholder interests can compromise the duty to be honest. An example of this is the cross-selling scandal at Wells Fargo, in which employees were pressured to create millions of fraudulent checking accounts and credit cards without their clients' knowledge or consent.
Did you guess correctly? What informed your choice?
Both responses make sense. Each one is a concise answer to the question, "What gets in the way of doing the right thing?" Each contains relatable examples. Each obeys the basic rules of grammar and spelling. But only one was written by a human being. The AI chatbox wrote the first response, and I wrote the second.
If both responses are reasonable, what's the problem?
"What's the big deal?"
Here are three ethical problems raised by this experiment.
Citation problem #1: Who wrote what?
You're on!
Suppose you're preparing a presentation on new strategies in sales for your team. You search for recent articles on the topic and find one that looks perfect. Let's also suppose that the first section of the article—the one you'd like to quote—was written by an AI bot but that the article's author, Arthur Sittenwidrig, doesn't mention this fact. By passing off another's idea as his own, Sittenwidrig violates a fundamental principle of ethical intelligence: Be honest.
You know that it's good practice to cite the articles you quote from, but if you say, "According to Arthur Sittenwidrig in an article published in Sales Success Strategies magazine online….", you are unwittingly contributing to his ruse.
Citation problem #2: Where did the AI-generated material come from?
Ethics in presenting
"There is nothing new under the sun," says a passage in Ecclesiastes 1:9, and that gives rise to another problem with citing AI bots in a presentation or article.
If Arthur Sittenwidrig did mention that a bot wrote the section you want to quote, how would you cite this? "According to what a bot wrote in Arthur Sittenwidrig's article on new sales strategies…." Anyone paying attention to your talk would think, "What? How is that a legitimate source of knowledge? Where did the bot come up with that?"
The material an AI bot generates in response to a question you pose synthesizes existing writing. The work of one person or more played a role in the above section on what gets in the way of doing the right thing. Yet the bot I used doesn't cite any of these sources.
Citing material that an AI bot writes without attribution fails to give credit where it is due. As such, it violates another principle of ethical intelligence, Be fair.
A bigger problem looms: using bots to write articles, chapters, or books for you
Yet another source of stress for teachers: AI-generated essays
In their recent article in The New York Times, Claire Cain Miller, Adam Playford, Larry Buchanan and Aaron Krolik describe another problem raised by AI chatbots. A fourth-grade teacher, a professional writing tutor, a Stanford education professor, and bestselling author Judy Blume could not tell whether a human child or ChatGPT wrote three essays.
Adding to their already overstressed lives, teachers must now determine whether students are using their intellectual skills to write essays or having bots do it for them.
It's not just teachers who will be burdened with this. Editors at publishing houses will now be at risk of accepting manuscripts that an AI program has substantially or wholly written.
Finally, readers worldwide are about to be inundated by writing that has no direct human imprint, presented by unscrupulous writers who don't bother identifying their sources. It's not hard to imagine struggling writers asking themselves, "Why should I endure all of the work involved in writing an article or book when I can have AI do it for me?"
We use AI-assisted platforms to check our spelling and grammar, so what's the big deal here?
It payz to use speel-chek and grammur correckers.
There is an ethically relevant difference between using AI to ensure our spelling and grammar are correct and using it to create substantial written work.
The former uses AI to make our original thoughts more straightforward. The second uses AI to compensate for laziness.
Worse, when bots are not identified as sources for entire swaths of writing, the result is fraudulent. It may be legal to do this (for now), but it is dishonest.
Technology is ethically neutral. It can be put to good or bad use.
Like all forms of technology, artificial intelligence is ethically neutral. It's merely an instrument. It can be put to good use, prompting us to consider aspects of a problem we might not have thought of.
Artificial intelligence can also be used for ethically troubling purposes, such as writing sections of articles or entire books for us, which we then claim as our own.
How willing are we to use artificial intelligence with ethical intelligence? We can't use an AI chatbot to guide us. The answer depends on our tolerance for even more dishonesty and unfairness in the world than there already is.
Categories Insurance Quote Tags AI, artificial intelligence, Business, ChatGPT, ethics, innovation, Leadership, teaching, TECH, writing
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The village of Grandrieux is a small village located north of France. The town of Grandrieux is located in the department of Aisne of the french region Picardie.	The town of Grandrieux is located in the township of Rozoy-sur-Serre part of the district of Laon. The area code for Grandrieux is 02354 (also known as code INSEE), and the Grandrieux zip code is 02360.
The altitude of the city hall of Grandrieux is approximately 193 meters. The Grandrieux surface is 4.35 km ². The latitude and longitude of Grandrieux are 49.731 degrees North and 4.184 degrees East. Nearby cities and towns of Grandrieux are : Rouvroy-sur-Serre (02360) at 1.29 km, Résigny (02360) at 1.75 km, Parfondeval (02360) at 2.27 km, Raillimont (02360) at 3.40 km, Vaux-lès-Rubigny (08220) at 4.29 km, Brunehamel (02360) at 4.41 km, Rozoy-sur-Serre (02360) at 4.50 km, Les Autels (02360) at 4.74 km.
The population of Grandrieux was 97 in 1999, 90 in 2006 and 89 in 2007. The population density of Grandrieux is 20.46 inhabitants per km². The number of housing of Grandrieux was 49 in 2007. These homes of Grandrieux consist of 36 main residences, 6 second or occasional homes and 7 vacant homes.
Here are maps and information of the close municipalities near Grandrieux.
Search hotels near Grandrieux : Book your hotel now !
At right you can find the localization of Grandrieux on the map of France. Below, this is the satellite map of Grandrieux. A road map, and maps templates of Grandrieux are available here : "road map of Grandrieux". This map show Grandrieux seen by the satellite of Google Map. To see the streets of Grandrieux or move on another zone, use the buttons "zoom" and "map" on top of this dynamic map.
To search hotels, housings, tourist information office, administrations or other services, use the Google search integrated to the map on the following page : "map Grandrieux".
This is the last weather forecast for Grandrieux collected by the nearest observation station of Laon.
The latest weather data for Grandrieux were collected Friday, 26 April 2019 at 09:48 from the nearest observation station of Laon.


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Q: 'Spring Boot Security Starter and 'Key Cloak Spring Boot Starter' secures GET correctly but not POST I'm attempting to get a Spring Boot application I'm building to be protected by KeyCloak. I'm depending on the spring-boot-starter-security and keycloak-spring-boot-starter dependencies; this Gist shows the relevant setup. I can make a GET request to /updates successfully, but a POST request to /updates returns a 403 response (requests have a bearer token that is the access token retrieved for a user from KeyCloak who has the required role).
How do I setup KeyCloak and my application so that I can get consistent behaviour i.e. if GET on updates is allowed, POST on updates should be too?

redpajama_set_name: RedPajamaStackExchange


The big item in this week's print edition of Inside Scoop concerns a new project from Scott Youkilis (Maverick/Hog & Rocks), Eric Rubin (Tres Agaves Liquor) and Dave Esler (Hog & Rocks).
And much to the delight of those that have bemoaned the dearth of decent 'cue options in the Bay, it's going to be a 2300 square foot barbecue restaurant.
The lease was just signed this week, and the space — a former senior citizen center at 3416 19th Street, across the street from Hog & Rocks — requires a big build-out, so early winter is the initial goal.
Details — like the name — are still coming together, but there's plenty to discuss in the earlygoing. The format will be similar to classic Texas barbecue joints in that diners order at the counter, paying for meat by the pound. That said, Youkilis and co. won't necessarily adhere to one specific regional style. Naturally, there will be a local bent, and the meats will be both smoked and grilled. There will be a full bar, with a strong liquor program and classic cocktails.
The space is long, and Youkilis says it reminds him of a dining hall (and a barn). There's also a mezzanine; about 100 total seats are anticipated.