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2021 (8) TMI 1405 - AT - Income TaxAccrual of income in India - sale of Novell Software Products as 'Royalties' on substantive basis both under the Income-tax Act, 1961 as well as the India-USA DTAA - PE in India or not? - AO held that Novell Software Development India Private Limited ('NSDIPL') is a Dependent Agency Permanent Establishment ('DAPE') of Appellant in India - whether there is "Principal to Principal" arrangement between Novell Inc. and NSDIPL under the Distribution Agreement - HELD THAT:- So far as taxability of software sale by the US entity to Indian entities is concerned learned representatives fairly agree that the said issue is now covered by Hon’ble Supreme Court’s judgement in the case of Engineering Analysis Centre of Excellence (P.) Ltd[2021 (3) TMI 138 - SUPREME COURT] Existence of the dependent agency permanent establishment [DAPE] or not? - In the light of Hon'ble jurisdictional High Court's judgment in the case of Set Satellite (2008 (8) TMI 96 - BOMBAY HIGH COURT), so far as profit attribution of a DAPE is concerned, the legal position is that 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. As transactions in question were at arm’s length price, no taxability survives in the hands of the assessee. Once basic taxability under the DAPE itself comes to an end, all other issues raised in the appeal are rendered academic and infructuous.
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