TMI Blog2019 (2) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... order held that assessee had fixed place of business PE in India in terms of Article 5(1) and 5(2) of DTAA between India and Japan, which was being used by its employees-expatriates, as premises (at their disposal) for business of assessee. As Hon’ble Supreme Court in assessee’s own case for years under consideration has quashed and set-aside notice of reassessment u/s 148 of the Act, ground No.2 raised by assessee stands automatically allowed. As the notice has been quashed by Hon’ble Supreme Court, reassessment proceedings, pursuant to the said notice and the impugned orders passed by the AO stand automatically cancelled. - ITA Nos. 6018 And 6019/Del/2015 - - - Dated:- 13-12-2018 - SHRI N.K. SAINI, VICE PRESIDENT AND SHRI SMT. BEEN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /impounded during survey operation established business connection of assessee with its Indian subsidiary as per provisions of section 9(1)(i) of the Act, and existence of permanent establishment of assessee through its Indian subsidiary. Accordingly Ld.AO/ Ld. DRP was of opinion that income attributable to permanent establishment in India, has escaped assessment. Ld. AO, thus, passed final assessment order after DRP directions and attributed 25% of the global income amounting to ₹ 12,01,49,055/- to the PE. 3. Aggrieved by order of Ld.AO assessee is in appeal before us now on following grounds of appeal: 1. That on the facts in the circumstances of the case and in law, the orders passed by the Assessing Officer (AO) /Dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidiary does not in itself create a Permanent Establishment of the non-resident. 3.4 That the AO/DRP erred in law in selectively relying on the statement of expatriate employees and failed to appreciate the true intention of the statements which evidenced that the expatriates were working only for HCIL in India. 4. That the AO/DRP erred in bringing to tax the off-shore supplies made by the Appellant to HCIL without appreciating that title and risk of these goods was transferred outside India to HCIL and hence no portion of the profit arising therefrom could be brought to tax in India. 4.1 That the AO/DRP completely failed to appreciate that the international transactions relating to purchase of rawmaterials of HCIL from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying the adjusted global profit ratio of 10.59% after making disallowance of research and development (R D), when as per global balance sheet operating profit ratio is 4.23%. 7.1 That on the facts and circumstances of the case and in law, the AO/ DRP has erred in increasing the global operating profit ratio by 5.34% (on the basis of consolidated global accounts) stating that R D expense does not relate to appellant's PE in India. 7.2 That on the facts and circumstances of the case and in law, the AO/ DRP failed to appreciate that once the profits are calculated on the basis of profit ratio, no further expense can be disallowed from the profit ratio. 8. That the AO/DRP has grossly erred in law and facts in directing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee thereafter filed SLP before Hon ble Supreme Court against order dated 05/08/14, passed by Hon ble Allahabad High Court. Hon ble Supreme Court admitted SLP Nos.26826/14 and 26803/14 in respect of assessment years under consideration before us now, wherein following substantial questions of law were formulated: a) Whether the reasons recorded are contrary to the provisions of Article 5(9) of the DTAA which provides that the fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 42 of paper book, wherein, Civil Appeal being 2837-2838 of 2018 arising out of SLP (C)No.26826/2014 and 26803/2014 (supra) has been allowed by Hon ble Supreme Court vide order dated 14/03/2018, by observing as under: In the judgment of this Court dated 24.10.2017 in Assistant Director of Income Tax-1, New Delhi vs. M/s EFunds IT Inc., Civil Appeal No. 6082 of 2015 and connected matters, it has been held that once arm s length principle has been satisfied, there can be no further profit attributable to a person even if it has a permanent establishment in India. Since the impugned notice for the reassessment is based only on the allegation that the appellant(s) has permanent establishment in India, the notice cannot be sustai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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