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TMI Blog2023 (9) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... ermany while passing the impugned order. 3. That the Learned Assessing Officer/DRP has grossly erred both on facts and in law in considering M/s GEBR Pfeiffer India Private Limited (GPI) as Permanent Establishment (PE) of the Appellant without appreciating the fact that "GPI" is merely a subsidiary company of the Appellant and PE is not constituted by merely having a subsidiary as per Article 5 of the DTAA between India and Germany; 4. That the Learned Assessing Officer/DRP has grossly erred both on facts and in law in considering "GPI" as PE of the Appellant without appreciating the fact that "GPI" is an independent entity and has no contribution or attribution to the profits of Appellant in India or elsewhere; 5. That the Learned Assessing Officer/DRP has grossly erred both on facts and in law in considering that the Appellant maintains a fixed place of business at the premises of "GPI" from where significant core activities of the Appellant are being carried out which is without any basis and purely based upon the assumption and surmises; 6. That the Assessing Officer/DRI has growly erred in considering that the Appellant has business connection in India through its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness or profession in the computation of income. The Learned Assessing Officer/DRP has failed to understand that computation of income only reflects the Profit before tax and not the gross Revenue of the Appellant. 13. That without prejudice to above, the appellant has filed an application for rectification of mistake against the Directions of the DRP issued u/s 144C(5) of the Income Tax Act, 1961 read with section 154 of the Income Tax Act, 1961 with respect to considering the Gross Revenue declared in the Return of Income as the net profit of the Appellant in India, which is pending adjudication. 14. That the Learned Assessing Officer/DRP has grossly failed in applying the rule of consistency without appreciating the facts that in the earlier assessment years 25% of the gross revenue declared by the Appellant in the return of income was attributed to the PE and 10% of the revenue attributed was estimates as attributed profit taxable in India as compared to 100% of the gross revenue of the Appellant has been considered as the profit of the appellant and attributed the same to the alleged PE in the year under consideration which is arbitrary, extraneous and without any basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry i.e Germany. The assessee claimed that the income received as supervision charges was its income and in the absence of permanent establishment (PE) in India the same was exempted under Article 7 of India -Germany DTAA. The assessee also stated that Indian income claim ed as exempted u/s 90 of the Indian Income Tax has been duly disclosed in the income of Germany entity for the year under consideration. However, the A.O held that M/s Gebr Pfeiffer India Pvt. Ltd. was a permanent establishment of the assessee i.e Gebr Pfeiffer Se through which the assessee has business connection in India. The A.O further stated that Gebr Pfeiffer Se Germany was the holding company of the Indian entity Gebr Pfeiffer India Pvt Ltd. The A.O was of the view that the Indian subsidiary was the face of the assessee company in India and also helped in its business development. The services provided by the assessee which have been termed by it as a part and parcel of business supply was also attributable to the business relation with its Indian subsidiary. Accordingly, the A.O held that the assessee company has a PE in India through its subsidiary namely Gebr Pfeiffer India Pvt. Ltd. Therefore the A.O s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. That the Learned Assessing officer has grossly erred in considering Indian subsidiary as the face of the Assessee which is devoid of facts and such a concept is alien to the Indian Income Tax Act 1961. 9. That the Assessing Officer has grossly erred in considering that the Indian subsidiary helps in business development, to the Assessee Company without any contrary evidence or at any show cause before coming to such a conclusion. 10. That the Assessing Officer has grossly erred both on facts and law in the interpretation of various judicial decisions of the courts and Me reports of OECD in the draft order assessment order passed and in applying the same to the facts and circumstances of the case of the assessee company. 11. That the Assessing Officer has grossly erred in applying Rule 10 of the Income Tax Rules to the facts and circumstances of the case of the assessee company which is devoid of facts applicable to the assessee. 12. That the Learned Assessing Officer has grossly erred in estimating that 100% of the gross revenue earned by the Assessee was attributable to the PE which otherwise is also without any basis and has been estimated without any contrary evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant whereas its subsidiary company based in India was engaged in the business of non -core items which were also required for cement plant s. The ld. Counsel submitted that because of different function performed by these company the A.O has failed to establish that how the assessee was having permanent establishment in the form of its subsidiary company in India when both these companies have performed separate function directly to their client. The ld. Counsel has also referred different pages of paper book in respect of various submission made before the A.O and DRP during the course of assessment proceedings and DRP proceedings. The ld. Counsel referred letter dated 27.11.2019 filed before the A.O wherein with various details it was explained that assessee has no activity based permanent establishment in India. The ld. Counsel also submitted that assessee company has executed separate contracts with its clients in India. He referred copy of supervision contracts placed in the paper book which were executed separately by the assessee company with Shree Cement, Jaypee Cement Ltd., Emami Cement and also submitted that assessee's subsidiary company has also execute d such contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P further stated that both these companies were working in the same industry and their supply line compliment each other perfectly. Therefore, the ld. DRP held that the core activities of the assessee have been performed throughout the year through a fixed place of business through its subsidiary company in India, therefor it has a PE in India in terms of Article 5(1) of the DTAA between India & Germany. However, we find that before the A.O & DRP the assessee has specifically furnished the copy of contract executed between the assessee and their client and between its subsidiary company and their client separately for the different nature of work. The detail of such document furnished before the lower authorities were as under: "1. Copy of Supervision Contract between Shree Cement Ltd and Gebr. Pfeiffer SE dated 11th March, 2013 with amendments dated 21/03/2013 & 18/10/2014. 2. Copy Supervision Contract between Shree Cement Ltd and Gebr. Pfeiffer India Pvt Ltd dated 09/08/2016 with amendments dated 16/02/2018 3. Copy of Contract between Shree Cement Ltd and Gebr. Pfeiffer India Pvt Ltd dated 12/04/2016 for supply of raw mill and coal mill (Indigenous) 4. List of non-core ..... X X X X Extracts X X X X X X X X Extracts X X X X
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