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The Tax Publishers Alleged existence of Permanent Establishment (PE) and Attribution of Income - Indo-Singapore DTAA - Authorised seller, warranty and installation agreement - Distributor agreement - Marketing support services agreement *Facts:* Assessee a Singapore resident had appointed an Indian company DHR India as its authorized seller, distributor, warranty, installation support and marketing agent in India. Plea of the revenue was by virtue of three different agreements DHR became a place PE besides being an agency PE. Accordingly attribution of income was done in India for the assessee. Assessee's counter was that none of the contract concluding powers were given to DHR India and they were like a third party service provider + were also remunerated at Arm's length Price (ALP). That by remunerating an Indian alleged PE agent at ALP there cannot be further attribution of Income either. On higher appeal by assessee before ITAT - Held in favour of the assessee that the revenue has failed to prove the existence of PE and once the agent is remunerated at ALP there cannot be further attribution of Income in the hands of the assessee in India. *Applied:* Assessee's own case for AY 2017-18, 2018-19, 2019-20 and 2020-21. ITA No. 514/Del/2021 order dated 29.04.2022 Delhi ITAT A.Y. 2017-18. ADIT v. M/s. E Funds IT Solution Inc. (Civil Appeal No.6082 of 2015) DCIT v. Lubrizol Corporation, USA 2016 TaxPub(DT) 3371 (Mum-Trib) DIT v. Morgan Stanley & Co. (2007) 162 Taxman 165 (SC) : 2007 TaxPub(DT) 1354 (SC) Honda Motor Co. Ltd., Japan v. ADIT (Civil Appeal No. 2833 of 2018, dated 14.03.2018) : 2018 TaxPub(DT) 2086 (SC) Ricardo UK Ltd. v. DCIT (ITA No.4909/Del.2018 and Ors., dated 17.02.2021) : 2021 TaxPub(DT) 1197 (Del-Trib) *Ed. Note:* There is no res judicata in tax proceedings. However for sake of consistency it is better such futile appeals are stopped. Also it is better if the CBDT comes out with a detailed circular on its stand on PE and ALP remuneration once there no PE can survive. This will in still greater confidence in the investor community. *Case:* AB Sciex Pte. Ltd. v. ACIT 2023 TaxPub(DT) 1832 (Del-Trib)

The Tax Publishers

Alleged existence of Permanent Establishment (PE) and Attribution of Income - Indo-Singapore DTAA - Authorised seller, warranty and installation agreement - Distributor agreement - Marketing support services agreement

Facts:

Assessee a Singapore resident had appointed an Indian company DHR India as its authorized seller, distributor, warranty, installation support and marketing agent in India. Plea of the revenue was by virtue of three different agreements DHR became a place PE besides being an agency PE. Accordingly attribution of income was done in India for the assessee. Assessee's counter was that none of the contract concluding powers were given to DHR India and they were like a third party service provider + were also remunerated at Arm's length Price (ALP). That by remunerating an Indian alleged PE agent at ALP there cannot be further attribution of Income either. On higher appeal by assessee before ITAT -

Held in favour of the assessee that the revenue has failed to prove the existence of PE and once the agent is remunerated at ALP there cannot be further attribution of Income in the hands of the assessee in India.

Applied:

Assessee's own case for AY 2017-18, 2018-19, 2019-20 and 2020-21.

ITA No. 514/Del/2021 order dated 29.04.2022 Delhi ITAT A.Y. 2017-18.

ADIT v. M/s. E Funds IT Solution Inc. (Civil Appeal No.6082 of 2015)

DCIT v. Lubrizol Corporation, USA 2016 TaxPub(DT) 3371 (Mum-Trib)

DIT v. Morgan Stanley & Co. (2007) 162 Taxman 165 (SC) : 2007 TaxPub(DT) 1354 (SC)

Honda Motor Co. Ltd., Japan v. ADIT (Civil Appeal No. 2833 of 2018, dated 14.03.2018) : 2018 TaxPub(DT) 2086 (SC)

Ricardo UK Ltd. v. DCIT (ITA No.4909/Del.2018 and Ors., dated 17.02.2021) : 2021 TaxPub(DT) 1197 (Del-Trib)

Ed. Note: There is no res judicata in tax proceedings. However for sake of consistency it is better such futile appeals are stopped. Also it is better if the CBDT comes out with a detailed circular on its stand on PE and ALP remuneration once there no PE can survive. This will in still greater confidence in the investor community.

Case: AB Sciex Pte. Ltd. v. ACIT 2023 TaxPub(DT) 1832 (Del-Trib)