TMI Blog2018 (1) TMI 1705X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 12-1-2018 - SHRI SHAMIM YAHAYA, AM SHRI SANDEEP GOSAIN, JM For the Appellant by : Sh. M. V. Rajguru, DR For the Respondentby : Sh. Niraj Sheth /Jay Bhansal ORDER Per Bench : The present 8(eight) Appeals as well as 8 (eight) Cross Objections filed by the revenue as well as assessee are against the order of Commissioner of Income Tax (Appeals)-10, Mumbai. 2. Since all the issues involved in these appeals /cross objections are common, therefore, they have been clubbed, heard together and a consolidated order is being passed for the sake of convenience and brevity. Cross Objection No. 32/Mum/2010 (AY 2006-07) 3. First of all we take up Cross Objection No. 32/Mum/2010 (AY 2006-07) as lead case. The grounds of cross objection are as under:- 1. Without prejudice to the judgment of the Hon. CIT (A), wherein it is held that the assessee has no PE in India hence its income is not taxable in India, even if it is held that assessee has FE in India, the income of the assessee is not taxable in India as the assessee has paid arms length remuneration I commission to its Agent in India having regards to the functions and risk performed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for the reason that the transaction between the assessee and AE has been found at arms length price. For this the learned Counsel for the assessee relied on the decision of Hon ble Supreme Court in the case of ADIT vs. EFunds IT Solution Inc. in Civil Appeal No.6082 of 2015 vide order dated 24.10.2017 wherein vide Para 22 reads as under: - 22. Shri Ganesh has referred to and relied upon an order of the Additional Taxation Commissioner, who is the Transfer Pricing Officer. The said order is dated 22nd February, 2006 and states as under: The taxpayer company filed its return of income with ACIT Circle 11(1), New Delhi. A reference was received from the Assessing Officer to determine the arm s length price u/s 92CA(3) in respect of international transactions entered 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 outside India. Under Article 7(2) not all profits of MSCo would be taxable in India but only those which have economic nexus with PE in India. A foreign enterprise is liable to be taxed in India on so much of its business profit as is attributable to the PE in India. The quantum of taxable income is to be determined in accordance with the provisions of the IT Act. All provisions of the IT Act are applicable, including provisions relating to depreciation, investment losses, deductible expenses, carryforward and set-off losses, etc. However, deviations are made by DTAA in cases of royalty, interest, etc. Such deviations are also made under the IT Act (for example Sections 44-BB, 44-BBA, etc.). 36. Under the impugned ruling delivered by AAR, remuneration to MSAS was justified by a transfer pricing analysis and, therefore, no further income could be attributed to the PE (MSAS). In other words, the said ruling equates an arm s length analysis (ALA) with attribution of profits. It hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PE or not and no addition on this count can be made in the case of assessee. When these facts were confronted to the learned CIT Departmental Representative, he fairly conceded the position as regards to alternative contention of the assessee. 7. After hearing rival contentions and gone through the facts and circumstances of the case. We find 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 EFunds IT Solution Inc. (supra) and also coordinate Bench decision nin the case of Taj TV Ltd. (supra). Respectfully following the same we allow the appeal of the assessee. 8. In the result, the appeal of assessee is allowed. After having gone through the orders passed by the Coordinate Bench of Hon ble ITAT and the submissions of the assessee and as per the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X
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