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ACIT, Circle 2 (1) , New Delhi. Versus Radware Ltd.

2016 (1) TMI 1106 - ITAT DELHI

Permanent Establishment(PE) in India - whether assessee only having activities that are proprietary or auxiliary in nature - Held that:- We have observed from the findings of the ld. CIT(A) that the assessee has been involved in supplying the literature relating to marketing and sales without any participation in actual sales activity. The Israeli company is selling the products to the distributors as per the requirements directly from Israel, and also makes efforts to services and maintain prod .....

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he contract between the distributors and the Israeli company. The distribution contract, per se at page _____ of the paper book, do not result into any generation of income and, therefore, the activities of the assessee have to be definitely considered to be proprietary and auxiliary in nature. The ld. AR has brought to our notice RBI approval, at page 10 of the paper book, which has been received by the assessee, for the purposes of undertaking liaison activities and to act as a communication c .....

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3099/Del/2009 - Dated:- 21-1-2016 - SHRI N.K. SAINI, ACCOUNTANT MEMBER & SMT. BEENA PILLAI, JUDICIAL MEMBER For the Appellant : Smt. Rasmita Jha, Sr. DR For the Respondent : Sh. Ved Jain, CA ORDER PER BEENA PILLAI, JUDICIAL MEMBER: The present appeal has been filed by the Revenue against the order of the ld. CIT(A) s-XXIX, New Delhi vide his order dated 26/03/2009 for A.Y. 2005-06 on the following grounds: 1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in hold .....

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sponse to the notice u/s 142(1) of the Act on 04.01.06. Accordingly, notices u/s 143(2) of the Act was issued. The assessee is a liaison office in India of company incorporated in Israel. In Israel the company is engaged in the development, manufacture and sale of Internet Traffic Management Solution under the style and name Radware Limited. The ld. AO further noted that in India, the liaison office is undertaking activities and acting as a communication channel between its head office in Israel .....

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an appeal before the ld. CIT(A). 3.1. The ld. CIT(A) considered the provisions of Indo Israel double taxation avoidance agreement and held that the assessee was not a PE but was having activities in nature of proprietary and auxiliary services. The ld. CIT(A) placed its reliance on the decision of the Hon ble Jurisdictional High Court in the case of UAE Exchange Centre Limited vs. Union of India and Anr., reported in 313 ITR 94, and deleted the addition made by the AO. 5. Aggrieved by the order .....

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fic Management Solution. The ld. AR further submitted that Indian liaison office is undertaking solely liaison activities, and are acting purely as a communication channel between its head office in Israel, and parties in India. The ld. AR stated across the bar that the assessee is not carrying on any activity of a trading, commercial or industrial in nature, and does not have any business income arising in India. 6.2. The ld. AR further submitted that, it is an undisputed fact that the company .....

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d. AR contended that the activities carried on by the Indian liaison office are covered under article V of the Indo Israel DTAA. The ld. AR has placed his reliance upon the following judgments: i. UAE Exchange Centre Ltd. vs. Union of India & Anr. reported in (2009) 313 ITR 94; ii. Director of Income Tax (International Taxation) vs. Morgan Stanley & Co. Inc. (2007) 292 ITR 416 (SC); iii. Mitsui & Co. Ltd. vs. ACIT (International Taxation) (2008) 4 DTR 356; iv. Western Union Financial .....

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, the Indian office amounts to a PE in India. 8. We have perused the paper book, the arguments advanced by both the parties and the judgment of the Hon ble Delhi High Court relied upon by the ld.AR . 8.1. We observe that the decision of the Jurisdictional High Court in the case of UAE Exchange Centre Limited (supra) covers the issue which needs to be considered in the present appeal. We have observed from the findings of the ld. CIT(A) that the assessee has been involved in supplying the literat .....

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