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TMI Blog2019 (4) TMI 2073X X X X Extracts X X X X X X X X Extracts X X X X ..... ;) for the assessment year 2015-16 vide order dated 27.09.2017 under section 143(3) read with section 144C(13) of the Income Tax Act, 1961(hereinafter 'the Act'. 2. The first issue in this appeal is as regards to the order of DRP/ AO in attribution of the income of the assessee holding that the assessee has permanent establishment in India. Consequently, making addition on account attribution of income being recipient of such commission income. For this assessee has raised the following 6 grounds: - "1. On the facts and circumstances of the case and in law, the Hon'ble Dispute Resolution Panel ('Hon'ble DRP') / Learned Assessing Officer ('Ld. AO') erred in further attributing Rs. 6,23,87,957 as income of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct liability, risk and credit risk attributable to it; 5.3 rejecting the comparable companies as functionally different; 5.4 not undertaking the facts finding exercise and failed to substantiate their assumption by not bringing anything on records; 5.5 computing the arms' length price of the transaction without referring the issue to the transfer pricing officer, which is in gross violation of Instruction NO. 3012016 issued by the CBDT; 5.6 determining an ad-hoc attribution of profits, without any basis / comparative study and without considering the audited financial statement for the year ended on 31 December 2014. 6. On the facts and circumstances of the case and in law, the Hon'ble DRP / Ld. AO erred in: 6.1 not ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed the income of the assessee at Rs. 6,23,88,000/- by holding that the assessee has permanent establishment in view of the agency agreement between the assessee and its subsidiary Hemple India. It was noted by AO and DRP that pursuant to the said agency agreement, Hempel India assisted the assessee in sale of its products in India to third party consumers. The Assessee earned sales revenue from India arising from above business activity. The rights and responsibilities under the agency agreements between the Assessee and Hempel India created Agency Permanent Establishment (PE) of the assessee in India as per Article 5(4) of the India - Singapore Tax Treaty. In consideration of the services rendered by the Hempel India to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is that the commission payment to Hempel India by the assessee is adequate and justified on the basis of transfer pricing analysis, which has indeed been affirmed by the income- tax authorities in the case of Hempel India for the instant assessment year. Therefore, according to the assessee, no further income could be attributable to its agency PE again. In other words, as per the assessee, once transfer pricing analysis of the transaction between assessee and its agent in India has been undertaken, there is no further need to attribute profits to the agency PE so long as the remuneration to the Indian agent has been held to be at an arm's length price. Undoubtedly, the proposition sought to be canvassed by the assessee has the appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different view cannot be taken in the case of assessee nonresident who had paid the same commission to its agent. The Hon'ble High Court deemed it fit to apply the proposition approved in the case of M/s. Morgan Stanley & Co. Inc (supra) as well as in the case of SET Satellite Singapore Pte Ltd. (supra) even in a situation where the transfer pricing reference was in the context of Indian recipient of income. In our considered opinion, the ratio of the judgment of the Hon'ble Delhi High Court in the case of BBC Worldwise Ltd. (supra) is fully attracted in the present case and, therefore, the addition of Rs. 5,15,05,000/- to the returned income is clearly untenable in the facts of the instant case. We hold so. 9. Since we have dele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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