Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (2) TMI 1323 - AT - Income TaxReopening of assessment u/s 147 - assessment which was processed u/s 143(1) on the ground that the assessee had an exclusive agent in India in the form of M/s ZTL which is soliciting advertisement on its behalf and collecting advertisement revenue in India - contention of the AO that M/s ZTL was held to be dependent agent of the assessee and also held to be constituting a PE of the assessee in India under Article 5(4)/5(5) of the DTAA between India and UK - HELD THAT:- As mentioned earlier, in the order u/s 92CA(3) TPO was concerned with sale of TV programs and films which ZEEL has shown at Rs.83.78 crores. In the instant case, we are concerned with the gross revenue received by the appellant from advertisement from India. The above order passed by the TPO does not deal with the gross revenue received by the assessee from advertisement from India. It is not the case of the revenue authorities that the gross revenue received by the assessee from advertisement from India is not at arm’s length remuneration. Therefore, once we hold that in the light of present legal position, existence of dependent agency permanent establishment is wholly tax neutral, the question regarding existence of DAPE is a wholly academic in question. We need not therefore deal with the question about the existence of the DAPE, as it is an academic exercise with not tax effect involved. Section 92F(ii) of the Act defines arm’s length price as a price which is applied or proposed to be applied in the transaction between persons other than associated enterprises (‘AE’) in uncontrolled transactions. As rightly held in E-Funds [2017 (10) TMI 1011 - SUPREME COURT] that “where transactions between assessees (two US Companies) and Indian entity where at arm’s length price, no further profits could be attributed even if they are existed a PE in India. It is aptly held in Set Satellite (Singapore) Pte. Ltd.[2008 (8) TMI 96 - BOMBAY HIGH COURT] “if the correct arm’s length price is applied and paid, then nothing further would be left to be taxed in the hands of the foreign enterprise”. Similarly, in Asia Today Ltd. [2021 (2) TMI 95 - ITAT MUMBAI] it is held that “in the light of Hon’ble Jurisdictional High Court’s judgment in the case of Set Satellite (supra), so far as profit attribution of a DAPE is concerned, the legal position is held as long as an agent is paid an arm’s length remuneration for the services rendered, nothing survives for taxation in the hands of the dependent agency permanent establishment. Viewed thus, the existence of a dependent agency permanent establishment is wholly tax neutral - Appeal allowed.
|