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TMI Blog2017 (6) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein it is held that the Respondent Company is not a dependent agent in India as per Article 5.4 of the Double Taxation Avoidance Agreement between India and the USA ? 6.2 Whether on the facts and in the circumstances of the case and in law, the Tribunal was in error in upholding the finding of the Commissioner Appeal that the Respondent Company does not have a Permanent Establishment in India and therefore, the Respondent Company should not be regarded as having a dependent Agent Permanent Establishment under Article 5.5 of the Double Taxation Avoidance Agreement between India and the USA, whereas the activities of the Respondent Company are wholly or almost wholly engaged in the business of the Parent/Principal Company in the USA ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' basis with M/s.Komli Inc. is not borne out by the facts on record. According to the learned Counsel, the transaction between the respondent and M/s.Komli Inc. will have to be viewed as that of an agency and thereby creation of permanent establishment. These aspects have not been considered by the authorities. According to the learned Counsel, amended explanation to Section 9(2) of the Income Tax Act has not been construed with proper perspective by the Tribunal. 3. Learned Counsel for the respondent submits that the Commissioner of Income Tax (Appeals) and the Tribunal have rightly considered the nature of the transaction between the respondent and the foreign company. The transaction is on 'Principal to Principal' basis, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Komli Inc. books space on the relevant foreign website, say for USD 'X' i.e. cost of Komli Inc. 4. Komli Inc. sells this space to the Appellant at cost plus 33.33 percent i.e. X + 33.33%. 5. The Appellant in turn sells the said space to the Indian Client at cost plus profit, say Y, i.e. 1.33X + Y. 6. Appellant remits 1.33X to Komli Inc. 7. The Appellant recovers from Indian client 1.33X + Y. 8. All transactions are on Principal to Principal basis." 7. Considering the said nature of transaction, it has been held that there is no creation of agency. The transaction is at arm's length. Merely, because some of the Directors are common that itself would not lead to irresistible conclusion of permanent establishment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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