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2015 (10) TMI 299 - ITAT MUMBAIInclusion of reimbursement of expenses received for the purposes of computing the commission income - department’s case is that for the puprose of calculation of commission, the reimbursement of expenses, which has been received by the assessee has to be included in the gross sale value, as the commission is payable on the entire sales executed by the assessee including the part/equipment procurred locally - Held that:- Schedule ‘A’ categorically provides that commission is not to be computed on the sale orders which requires the procurement of local content by the assessee, then on such procurement of equipements by the assessee, commission cannot be imputed, because it is the reimbursment of the cost of local equipments procured. Further, it appears that this relevant piece of document which is also a part of “Distribution and Representation Agreement”, has not been examined by the Assessing Officer. Therefore, for the purpose of verification and examining of the content of this schedule, we restore the matter back to the file of AO, to adjudicate this issue afresh in light of the aforesaid document, because it changes the entire colour of the conclusion drawn by the AO. The AO will also examine the fact, whether the commission is on sale of Varian products only or not. The quantum of commission is a question of fact and cannot be imputed or presumed. In case of reimbursement of expenses from Varian Germany also, the matter is set-aside for examining, whether the commission is on gross sales or on the net of sales of the equipments directly procured by the associate enterprises. If the arrangement with this AE is also the same, then the same conclusion should be drawn in this case also. - Decided in favour of assessee for statistical purpose. Addition on account of attribution of profits by treating the assessee branch as permanent establishment of various VGCs - Held that:- This issue, whether the assessee is a PE of various Varian group of companies or not, has been discussed in detail by the Tribunal in assessee’s own case for the assessment years 2002-03 to 2006-07 [2013 (11) TMI 195 - ITAT MUMBAI]. After detail analysis, the Tribunal has finally held that, the Indian branch of the VIPL is not dependent agent of VGCs and therefore, it does not constitute PE for various Varian companies in India, as per Article 5(4) 5(5), respective DTAAs. Thus, in view of the findings given therein and as a matter of judicial precedence, we hold that the assessee branch, does not constitute PE of Varian-Italy and, therefore, the addition being 10% of gross sales made by Varian Italy to its customer in India, cannot be taxed in the hands of the assessee. - Decided in favour of assessee
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