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2023 (12) TMI 883 - DELHI HIGH COURTIncome taxable in India - attribution of profits at the rate of 50% to the India centre - fixed place PE in India or not? - core business of assessee concerns providing testing services to its clients, concerning transmission systems designed for automobiles at its centers located in U.K. - assessee had filed its Return of Income (ROI) in which it declared its income as “nil” as income earned by it from customers located in India was not taxable - AO concluded that assessee had a Permanent Establishment (PE) in India in the form of its subsidiary - AO proceeded to attribute 50% of the business profits by applying the global profit ratio HELD THAT:- The record shows that the Tribunal has returned a finding of fact that the respondent/assessee does not dispute that it had a fixed place PE in India in the form of Ricardo India. Inter alia, what persuaded the Tribunal to rule in favour of assessee is the other aspect which was that if the commission/remuneration paid to Ricardo India was reduced from the profit attributed to the PE, then no further attribution could have been made. Thus when RIPL, a domestic subsidiary company, has already been remunerated at arm’s length no further attribution of profit to PE would be warranted. Even otherwise by following the order passed by the coordinate Bench of the Tribunal in assessee's own case for AY 2007-08 [2020 (11) TMI 206 - ITAT DELHI] when we deduct the remuneration/commission paid to RIPL from the amounts of profit attributed to the PE as detailed in para 11 of this order, no taxable income left in the hands of the PE. Consequently, additions made by the AO and confirmed by ld. CIT(A) are ordered to be deleted being not sustainable in the eyes of law. Given the finding of fact returned by the Tribunal that no further profit could be attributed if commission/remuneration paid to Ricardo India is adjusted against the profit attributed to the PE, we are not inclined to interfere with the impugned order. Appeals filed by the assessee are hereby allowed.
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