Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1710 - ITAT DELHIAttribution of profits of the PE in India - whether the assessee company has a PE in India in the form of liaison office of M/s. Rolls Royce India Ltd., a separate entity for its sale of goods in India? - HELD THAT:- Once there is a finding that activities of LO have resulted in PE in India, then tax attributable to such activity must be brought to tax in India. If activities give rise to PE which undertakes marketing and sales in India then tax attribution of the PE must be made. Here the attribution in the hands of RRIL was only limited to cost plus basis, whereas in the case of the assessee the profit which has been attributed relates to purely sales of engines and parts. Nothing has been brought before us that under the MAP agreement the profit attribution of sales of RRPL were also subject matter of consideration or discussion and there cannot be any assumption that the quantum of tax agreed in the case of RRIL exhausts the contribution of profit to the PE of assessee in India. Blanket attribution as done by the authorities below does not seems to be on a sound footing, especially when they have alleged that common activities were carried out from the LO. Then in that case, it would not possible to distinguish as to which activities of LO pertains to RRIL or activities of LO were undertaken on behalf of the assessee and what part of activities at the LO which assessee itself was executing for its sale. We hold that the profits to be taxed in the hands of the assessee in the assessment years impugned before us, should be attributed at 35%, instead of 75% subject to rectification as stated above in para 14, which should be made in the computation of tax for each of the assessment years. Further, tax actually paid by the assesse for these years should be credited from the tax liability to determine the final amount to be paid or refunded to the assessee as the case may be.
|