TMI Blog2011 (7) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... a permanent establishment (PE) in India under the provisions of the Agreement for Avoidance of double taxation between India and France ( India-France DTAA ). 1.2 That on the facts and circumstances of the case and in law, the AO erred in holding that the activities carried out in India by the liaison office (LO) of the assessee company are not in the nature of preparatory and auxiliary activities. 1.3 That on the facts and circumstances of the case and in law, the AO erred in not appreciating that the activities carried out in India by the LO are merely preparatory and auxiliary in character, and are hence excluded from the definition of PE as envisaged under Article 5(4) of the India-France DTAA. 1.4 That on the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming an arbitrary methodology and a relatively very high rate of attribution of net operating profits (loss) for attributing income (loss) to the PE in India. Ground 3: Loss assessment 1.10 That on the facts and circumstances of the case and in law, and without prejudice to the other grounds of appeal, the AO has erred in not attributing a net taxable loss [to the extent of INR 122,079,085 (i.e. INR 1,366,615,567*17.8659%*50%)] in the final assessment order. 1.11 That on the facts and circumstances of the case and in law, without prejudice to the other grounds of appeal, the AO has erred in not providing for carry-forward and set-off of the loss attributable to the PE in the assessment year under consideration against the profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystems and has a liaison office in India. It made total sales in India of Euro 2,37,75,497/- (equivalent to ₹ 136,66,15,567/- from various Indian clients listed in the assessment order). 6. The AO in order to examine the nature of activities of the liaison office, send enquiry letters to the clients of the assessee. In response to such enquiry one of the clients of the assessee namely Instruments Research Development Establishment, Ministry of Defence, Dehradun vide letter dated 22.12.2009 informed that the name and designation of the person with whom it negotiated the sale price of the products of the assessee company was Mr. Bernard Lacoste. The AO did not receive any reply from any other client of the assessee. The AO observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as the said additional evidence will go to the route of the matter vide which the assessee can prove that its liaison office in India could not be treated as permanent establishment of the assessee. To substantiate his argument regarding non-grant of reasonable opportunity ld. AR has placed before us the copy of calendar from the hand book issued by Directorate (R SP) Income Tax Department for the year 2009. According to the said calendar 25/12 is a Friday which is holiday on account of Christmas and 26 27/12 are Saturday and Sunday which are close days. 28/12 which is Monday is also holiday on account of Moharrum falling on that day and thereafter only 29th is the working day which is Tuesday. Referring to the observations of AO from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, we admit the additional ground and proceed to decide the present appeal. 11. After narrating the facts, it was submitted by ld. AR that it will meet the end of justice, if the matter is restored back to the file of AO with a direction to give the assessee a reasonable opportunity of hearing and also to place all the material on the record of AO to support its case. 12. On the other hand, ld. DR relying upon the assessment order and the order passed by DRP pleaded that assessee was given reasonable opportunity of hearing. However, ld. DR could not controvert the factual aspect and contention of the assessee that virtually no time was provided to the assessee after the AO issued show cause notice to the assessee on 24.12.2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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