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2023 (3) TMI 1088 - AT - Income TaxIncome deemed to accrue or arise in India - Liaison Office (LO) as a Service PE or Dependent Agency Permanent Establishment (DAPE) - Estimation of the taxable profits as per Rule 10 of the Income Tax Rules - Whether Liaison Office (LO) of the Appellant constitutes a business connection of Appellant in India as per provisions of Section 9(1)(1)? - HELD THAT:- LO in India does not constitute PE in India under Article 5 of India Switzerland DTAA because. LO does not constitute a fixed place through which business of assessee is carried out in India. Employees of the LO do not negotiate, finalise or discuss the mechanics of contracts including pricing with the assessee's customers. As such the employees of LO merely act as a communication link between the assessee and the airline companies. LO did not carry any activity, beyond that permitted by the RBI. The activities carried by the LO are thus, preparatory (auxiliary in nature). The activities/operations of the assessee in connection with the contracts are carried from outside India. Ground No.1 to 4 raised by assessee are allowed and held that LO of subsidiary of assessee does not constitute a PE in the case of assessee, hence, addition on this ground made by AO is directed to be deleted. Appeal filed by the assessee is allowed.
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