TMI Blog2023 (12) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... (PE) in India in the form of its subsidiary - AO proceeded to attribute 50% of the business profits by applying the global profit ratio HELD THAT:- The record shows that the Tribunal has returned a finding of fact that the respondent/assessee does not dispute that it had a fixed place PE in India in the form of Ricardo India. Inter alia, what persuaded the Tribunal to rule in favour of assessee is the other aspect which was that if the commission/remuneration paid to Ricardo India was reduced from the profit attributed to the PE, then no further attribution could have been made. Thus when RIPL, a domestic subsidiary company, has already been remunerated at arm s length no further attribution of profit to PE would be warranted. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Article 4 of the India and UK Double Taxation Avoidance Agreement [in short, DTAA ]. 5. The core business of the respondent/assessee concerns providing testing services to its clients, concerning transmission systems designed for automobiles at its centers located in U.K. 6. In the period in issue, the respondent/assessee had filed its Return of Income (ROI) in which it declared its income as nil . The stand taken by the respondent/assessee was that the income earned by it from customers located in India was not taxable. 7. The record shows that the Assessing Officer (AO) concluded that the respondent/assessee had a Permanent Establishment (PE) in India in the form of its subsidiary, i.e., Ricardo India Pvt. Ltd. [her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibuted to the PE in the AY in issue and those that preceded the same and the commission/remuneration paid to it on Arm s Length basis: Assessment Year Profits attributed to PE (A) Commission/remuneration paid on arm s length basis (B) 2009-10 1,46,24,821/- 3,31,16,923 2010-11 38,97,594/- 3,36,21,632 2011-12 63,30,619/- 4,00,05,437 2012-13 1,00,91,845/- 4,09,81,100 2013-14 1,21,89,053/- 4,10, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case bearing ITA No.4906/Del/2010 for AY 2007-08 vide order dated 26.10.2020. 17. In view of what has been discussed above, we are of the considered view that when RIPL, a domestic subsidiary company, has already been remunerated at arm s length no further attribution of profit to PE would be warranted. Even otherwise by following the order passed by the coordinate Bench of the Tribunal in assessee's own case for AY 2007-08 (supra), when we deduct the remuneration/commission paid to RIPL from the amounts of profit attributed to the PE as detailed in para 11 of this order, no taxable income left in the hands of the PE. Consequently, additions made by the AO and confirmed by ld. CIT(A) are ordered to be deleted being not sustainab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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