9911796707
TMI Blog2024 (1) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/- and claimed refund of Rs. 13,660/- against tax credit of Rs. 7,97,348/-. 2.1 The assessee company was founded in 1978 in Aurtria. The objects of the company are the development and the industrial production of overhead accessories and damping systems from steel and metal as well as other steel and metal goods, which can be manufactured by pressing, forging, bending, welding and shaping by metal cutting as well as the industrial operation of a galvanizing plant. The company has a subsidiary in India named Mosdorfer India Private Limited which was incorporated in India in 2007. 2.2 During the course of assessment proceedings, in response to the notice dated 13.01.2022, the assessee filed its submission dated 19.01.2021 and submitted that during the year the assessee has received the following revenue directly/indirectly from India: Nature of Revenue Amount of revenue (In Rs.) Software related services 9,94,173 Consultancy and professional services 71,726 Interest received on fully convertible debenture 60,72,254 Supervision & Repair charges received 6,98,727 Reimbursement of expenses received 1,36,660 2.3 Apart from the above, Mosforfer GMBH has also received an am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide its reply dated 19.01.2022 that apart from Rs. 79,73,433/ the assessee has also received an amount of Rs. 47,47,71,207/- [equivalent to EURO 0911796 @ NR.66.69 as on 28.03.2013] from India on sale of exported goods and other tangible assets. Accordingly a show cause notice was issued on 10.03.2022 by AO to the assessee to provide the following information and show cause as to why the income received on account of supply/export goods or other tangible assets should not be considered as income for the year:- 1. Please provide copy of agreement/contract alongwith invoices for supply of goods and other tangible assets entered with Indian entities during FY 2012-13. Please also provide details of all the Indian parties to whom the goods/tangible assets were supplied during the year. 2. Please provide details about insurance made regarding transfer of goods to various Indian parties alongwith documentary evidence. 3. Please provide bill of lading of goods supplied from Austria to various Indian entities. 4. Please provide custom clearance certificate for the goods supplied in India during the year. 5. Please also explain as to why the income receipts from supplied/exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O observed that on perusal of the 26AS for the relevant assessment year, it is established that during the year the assessee has received various payments from its Indian subsidiary Mosdorfer India Private Limited. The assesse has not provided any list or any documentary evidence to establish that the goods were exported in India to any other entity apart from its Indian subsidiary. The AO observed that the assessee has provided software related services, consultancy and professional services and supervision & repair services to its Indian subsidiary. AO took note of the fact that the assesse has a subsidiary in India namely Mosdofer India Private Limited and as per the ROI filed for A.Y, 2013-14 the assessee held 74% shareholding of it. Further that the assessee is procuring business in India by Mosdofer India Private Limited. AO noticed that as per the services rendered to Mosdofer India Private Limited during the year it is clear that the assessee has not only supplied goods or tangible assets to its Indian subsidiary but also supervise it and provided repair service for it. The AO, thus concluded that to provide such services the assessee has deputed its expatriate personnel to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Establishment (PE) under Double Tax Avoidance Agreement (DTAA) is to be understood with reference to the definition of Permanent Establishment provided in Article 5 in the relevant DTAA. Under the DTAA, right of the contracting States to tax the business profits of an enterprise of other contracting State arises only if the enterprise carries on its business in the first mentioned State through a 'PE situated therein. PE is generally classified into six categories: i. Place of Management or Place of Effective Management (POEM); ii. Fixed Place PE (branch, office, factory, workshop, warehouse, sales outlet, website, etc.); iii. Construction PE (building site or construction); iv. Installation or assembly project PE (Criteria duration of each installation project); v. Service PE, i.e., vi. Dependent Agency PE. i.e., the enterprise does not have any economic or functional independence." It is seen from the structure of the assessee that Mosdorfer GMBH has a global footprint it has a subsidiary in India namely Mosdorfer India Pvt. Ltd., of which the assessee has a 74% shareholding. The Indian business of the assessee is being procured through M/s Mosdorfer India P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, Learned DRP/AO has erred in holding that the Appellant has procured business in India by through its Indian Subsidiary, MIPL which finding is based on pure surmises & conjectures. 8) On the facts and in the circumstances of the case and in law, Learned DRP/AO has erred in holding that business of the Appellant is being conducted through its subsidiary, MIPL. 9) On the facts and in the circumstances of the case and in law, Learned DRP/AO has erred in law in holding that the Appellant has not provided documentary evidence in support of its direct exports from locations outside India at the project offices outside India of its Indian Customers/Clients, which evidence has duly been provided in fact. 10) On the facts and in the circumstances of the case and in law, Learned DRP/AO has erred in invoking Rule 10 of the Income Tax Rules ("Rules in short) and estimating 10% profits on presumptive basis and applying 35% of such profit as liable to tax in India. 11) The Appellant craves leave to alter, modify, revise, add/delete ground (s) with the leave of Hon'ble Bench." 7. It is pertinent to mention that ground no 1 is general in nature and Ld. AR has arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relationship of Mosdorfer GMBH with the Laboratory, the invoice was raised on Mosdorfer GMBH and the same proposed to be reimbursed by Mosdorfer India." 12. Then at page no. 148 of PB, the copy of invoices from the concerned test laboratory was filed and page no. 149 to 155 the report given by the concerned laboratory was provided and the reimbursement invoice of 1900EUR made available at page no. 156. The Ld. DRP have fallen in error in considering the same to be in consultancy and professional services to the Indian associates. In spite of accepting that it was a reimbursement expense the DRP considered it to be substantially FTS in nature. We are of considered view that the assessee had not added any value to the laboratory report. Assessee had not played any role except for being a medium to procure a report from a laboratory having higher credibility. The same cannot at all be in the nature of FTS, as erroneously held by Tax authorites. Thus, we are inclined to decide the ground no. 1 in favour of the assessee. 13. In regard to ground no. 3 to 5 and 7 to 10, it will be appropriate to take them collectively as the same are based on common set of facts where the tax authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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