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2019 (2) TMI 346 - AT - Income TaxReopening of assessment - Attribution of income - existence of PE in India, through GEIIPL, has already been established in respect of all GE Group Overseas entities, and that assessee for the year under consideration made sales in India through a PE in India which has admittedly not been offered to taxation by assessee - Held that:- Assessee had failed to disclose revenue received from sales made to Indian customers through GEIIPL, on basis of materials gathered during survey for Ld.AO to form prima facie reason to believe by Ld.AO, of income having escaped assessment, for year under consideration, as per Explanation 2 (b) to Section 147 of the Act. From documents gathered during survey proceedings, which has been elaborately discussed in order passed by this Tribunal in case of GE Energy Parts Inc. (supra), are sufficient to compel a person, reasonably instructed in law, to form a view about existence of PE of assessee, along with employees of GEIIPL for all GE Overseas entities in India. We, thus are not inclined to accept contentions advanced by Ld.Counsel, that Ld.AO was not justified in initiating reassessment proceedings. Thus, fact that assessee had a PE in India and that there was an understatement of income to the extent of sale receipts received by assessee from Indian customers towards sale of spare parts/equipments, issuance of notice under section 148 brings case of assessee within fold of Explanation 2 (b) to Section 147 of the Act. We are fully satisfied that Ld.AO was justified in initiating reassessment proceedings. Existence of assessee’s business connection as well as permanent establishment in India - Held that:- Strategic decisions in terms of finalising of contract/MOU’S were also carried out by assessee with support of highly specialised employees of GEIIPL in field of marketing and sales. Ld.Counsel has not disputed before us that, assessee did not have a business connection in India, as per Section 9, Explanation 2 of the Act. Further in foregoing paragraphs, we have already discussed that, expatriates habitually exercised in India to conclude contracts, on behalf of assessee, and that activities were not limited to purchase of goods or merchandise for assessee. It has also been established that expatriates habitually secured orders in India, wholly for assessee, through GEIOC with continuous assistance of employees of GEIIPL in India. We, therefore do not agree with argument advanced by Ld. Counsel that, authorities below erred in mechanically placing reliance on earlier assessment year wherein, PE has been created with presence of GE International Inc., expatriates and/or employees of GE India Industrial Pvt. Ltd. By way of sufficient material, related to assessee gathered during survey, it is apparently clear that for sales to be effectuated in India during year under consideration, expats of GE International Inc., and employees of GE India Industrial Pvt. Ltd., jointly worked together and took strategic decisions for purposes of negotiation of agreements and sale prices of spare parts/machineries sold by assessee in India. Further, Ld.Counsel admitted that, no change has occurred after survey conducted in the year 2007. Thus in our considered opinion that assessee has a business connection in India and therefore the requirements under Clause 4 of Article 5 stands satisfied. We are therefore of the considered opinion that assessee has a dependent agent PE in India through GEIIPL. Attribution of estimated offshore supplies made by assessee to customers in India - Held that:- We hold that GE India conducted core activities and the extent of activities by assessee in making sales in India is roughly one fourth of total marketing effort. We, thus estimate 26% of total profit in India as attributable to operations carried out by PE in India. Therefore, as against Ld.AO applying 3.5% to sales made by assessee in India, we direct Ld.AO to apply 2.6% on total sales for working out profits attributable to PE in India. Interest levied u/s 234 B to be deleted
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