Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 719 - AT - Income TaxDependent agency PE of the assessee in India - profit attribution to the said DAPE - TP adjustments - Arm's length price - international transaction between assessee and the Indian AE -HELD THAT:- It has been brought on record that assessee has been subjected to TP adjustment and in the case of the assessee also the transactions have been found to be at arm’s length and additionally one of the two Indian AEs have also been subjected to TP adjustment and its transaction with assessee also to be at arm’s length and new adjustments have been made. Before us, ld. Counsel had also brought on record and also showed from TP documentation for A.Y.2018-19 of the assessee and both the Indian AEs and also from the TP order of the assessee and TNT India for the same year, that the international transactions of the Indian AEs with the assessee, are at arm’s length price wherein the mean margin determined based on five comparable companies in the case of both Indian AEs was 2.85% of income while the assessee has remunerated at a higher margin of 4% on their gross income. Apart from that, the ld. TPO has not recorded any finding that suggests that all the FAR undertaken by each of the parties were not adequately captured which negates any requirement for further attribution of profits in the absence of any left-out functions and risk taking activities. Accordingly, we agree with the contention of the ld. Counsel that once the transactions have been found to be at arm’s length, no further profit attribution can be made. In any case, it has been brought on record that assessee had incurred losses in the fiscal year 2018, 2019 and 2020 and ld. AO without analyzing the transactions had made the losses of the assessee into profit just merely rely on the draft report of the CBDT and a recommendary course of action for the profit attribution to the PE. Before, us, ld. Counsel has also demonstrated as to how no income can be taxable in the hands of the assessee looking to the fact that already in relation to the operations carried out by the assessee for its Indian AE already income has been subjected to tax in India in the hands of the AE DRP somewhere had stated that remuneration paid to Indian AE does not capture the functions/risks and return on the use of intangibles and therefore, it has upheld the profit attribution. Such a finding is not based on any proper analysis of the facts and documents and it is merely a hypothesis. Accordingly, such an observation of the ld. DRP cannot be sustained for the reason that already international transaction between assessee and the Indian AE have been subject matter of TP analysis and which had been concluded at arm’s length price. Even if no reference to the TPO has been made in A.Y. 2019-20, since the facts and circumstances and the margins on same transactions are the same and ld. AO was also not alleged that the transaction between the assessee and its AE are not at arm’s length, then in such case also, we do not find any reason to deviate from the decision as applicable for A.Y.2018-19 also. Accordingly, this issue is decided in favour of the assessee.
|