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2021 (3) TMI 333 - AAR - Income TaxAdvance ruling application u/s 245R - Amount received/receivable under Purchase Order in relation to offshore supplies of High Efficiency Traction Motors ('HETMs') from a port in Japan to DMRC in India - liability to tax in India under the provisions of the Act and/ or the Agreement for Avoidance of Double Taxation between India and Japan ('the Treaty') - only objection of the Revenue is that the transaction was designed prima-facie for avoidance of tax - CIT has contended that there was a business connection of the applicant in India which constitutes Permanent Establishment and an appropriate profit needs to be attributable to the P.E. in India. Therefore, the transaction was designed for avoidance of tax - HELD THAT:- We do not find any design to avoid tax by any illegal or improper means. The submission of the Revenue is mostly on the merits of the case which has to be considered in the course of merit hearing. Merely because the applicant has taken over the responsibility of risk of loss or damage till the equipments were delivered in Delhi and also that of insurance etc; it does not establish that the transaction was designed prima-facie for avoidance of tax. The question of Permanent Establishment has to be examined in the course of merit hearing and if it is established that there was a P.E., the natural consequence will follow. Department has not brought out any material to establish that there was a prima-facie case of avoidance of tax. Therefore, the application is admitted u/s 245 R (2) of the Act.
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