TMI Blog2017 (11) TMI 1642X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention made by the assessee that once no income chargeable to tax in India is attributable to the assessee for the reason that the transaction between the assessee and its AE has been found at arms length price, no further income chargeable to tax in India can be said to be attributable on account of PE. Accordingly, this issue is squarely covered in favour of assessee by the decision of Hon’ble Supreme Court in the case of E-Funds IT Solution Inc. (2017 (10) TMI 1011 - SUPREME COURT OF INDIA) and also co-ordinate Bench decision in the case of Taj TV Ltd. (2016 (12) TMI 1291 - ITAT MUMBAI). Respectfully following the same we allow the appeal of the assessee. - ITA No. 8862/Mum/2010 - - - Dated:- 17-11-2017 - Sri Mahavir Singh, JM AND S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it has paid commission to its Indian agent on arms length basis. 5. Without prejudice to other grounds of appeal the Hon DRP ought to have disposed off objection of the assessee on merits instead of confirming draft order Ld. AO on the ground that dept. has not accepted the order of the higher authorities i.e. CIT (A) in earlier year which is a equivalent authority and has gone to Mumbai Tribunal. 3. At the outset, the learned Counsel for the assessee stated that the AO as well as DRP has stated that the assessee has a permanent establishment in India in the form of dependent agent as per Article 5 of the treaty with USA. For this the learned counsel for the assessee first of all drew our attention to TPO s order dated 29-10-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into by the assessee during the F.Y. 2002-03. In response to notice u/s 92CA, Shri Vijay Iyer, CA of S.R. Batliboi Co. Chartered Accountants, authorized representative of the assessee appeared form time to time. The documentation prescribed under Rule 10D of the Income Tax Rules was submitted and placed on record. The taxpayer company is engaged in providing IT enabled services which include Back office services and Call centre services. It also has a software design center for development of software for call centres. eFunds International (India) Pvt. Ltd. is a wholly owned subsidiary of IDLX Holdings BV, Netherlands. IDLX is a wholly owned subsidiary of eFunds Corp. The major international transactions undertaken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly held in Morgan Stanley (supra) as follows: 32. As regards determination of profits attributable to a PE in India (MSAS) is concerned on the basis of arm s length principle we have quoted Article 7(2) of DTAA. According to AAR where there is an international transaction under which a non-resident compensates a PE at arm s length price, no further profits would be attributable in India. In this connection, AAR has relied upon Circular No. 23 of 1969 issued by CBDT as well as Circular No. 5 of 2004 also issued by CBDT. This is the key question which arises for determination in these civil appeals. (at page 25) xxx xxx xxx 35. The object behind enactment of transfer pricing regulations is to prevent shifting of profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions performed and the risks assumed by the enterprise. In such a situation, there would be a need to attribute profits to PE for those functions/risks that have not been considered. Therefore, in each case the data placed by the taxpayer has to be examined as to whether the transfer pricing analysis placed by the taxpayer is exhaustive of attribution of profits and that would depend on the functional and factual analysis to be undertaken in each case. Lastly, it may be added that taxing corporates on the basis of the concept of economic nexus is an important feature of attributable profits (profits attributable to PE). (at pages 27-28) 5. The learned Counsel also relied in ITAT s decision in the case of Taj TV Ltd. vs ADIT (inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the alternative contention made by the assessee that once no income chargeable to tax in India is attributable to the assessee for the reason that the transaction between the assessee and its AE has been found at arms length price, no further income chargeable to tax in India can be said to be attributable on account of PE. Accordingly, this issue is squarely covered in favour of assessee by the decision of Hon ble Supreme Court in the case of E-Funds IT Solution Inc. ( supra ) and also co-ordinate Bench decision nin the case of Taj TV Ltd. (s upra) . Respectfully following the same we allow the appeal of the assessee. 8. In the result, the appeal of assessee is allowed. Order pronounced in the open court on 17-11-2017. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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