Permanent establishment dispute remanded for fresh finding on admission and profit attribution before further tax determination.

The dispute concerned whether the existence of a permanent establishment in India had been conceded before the DRP and, if not, whether profit attribution could be examined afresh. The record indicated that the assessee had reserved its right to contest the non-existence of the permanent establishment, while the DRP had treated the correspondence as a concession and had not independently decided that foundational issue on merits. Because the permanent establishment question was the basis for any attribution exercise, the matter was restored to the DRP to first determine whether there was any admission on that issue and, if necessary, to decide the permanent establishment and attribution questions afresh in accordance with law.

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Issues: Whether the matters required remand to the Dispute Resolution Panel for a fresh decision on the existence of a permanent establishment and the consequent attribution of profits, after first determining whether the assessee had conceded the existence of the permanent establishment.

Analysis: The appeals arose from assessments in which the core controversy was the existence of a permanent establishment in India and profit attribution thereto. The letters placed before the Dispute Resolution Panel were read by it as a concession on the existence of the permanent establishment, and on that basis it proceeded to deal with attribution. The appellate record showed that the assessee had expressly reserved its right to contest the non-existence of the permanent establishment, and the Dispute Resolution Panel had not independently returned a finding on that foundational issue on merits. Since the existence of a permanent establishment was the substratum for any attribution exercise, the matter could not be finally resolved on the existing record without first clarifying whether there had been any admission at all.

Conclusion: The matter was remanded to the Dispute Resolution Panel for first ascertaining whether there was any admission regarding the existence of a permanent establishment, and, if not, for deciding the permanent establishment and attribution issues afresh in accordance with law.

Final Conclusion: The appeals were disposed of by restoring the dispute to the Dispute Resolution Panel for fresh adjudication on the foundational jurisdictional issue and the connected attribution question.

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