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of <h1>Supreme Court upholds ITAT's decision on PE, dismisses appeal for AY 2005-06</h1> <h3>Commissioner Of Income Tax (International Taxation) -2, Delhi Versus PT LP Display Indonesia</h3> Commissioner Of Income Tax (International Taxation) -2, Delhi Versus PT LP Display Indonesia - TMI Issues:Challenge to ITAT order allowing respondent-assessee's appeal for Assessment Year 2005-06.1. Whether ITAT erred in quashing assessment proceedings without appreciating business connection and Permanent Establishment (PE) in India.2. Whether ITAT erred in holding no income attributable to assessee's PE in India.3. Whether ITAT erred in setting aside re-opening of assessment under Section 147 of the Income Tax Act.Analysis:The appellant challenged the ITAT order, arguing that the re-opening of assessment under Section 147 of the Income Tax Act was justified based on the reasonable belief of income escapement, emphasizing no need to prove actual escapement. The appellant criticized ITAT's reliance on past orders and judgments, asserting the legality of re-assessment proceedings initiation. The appellant contended that a non-resident's income received in India is taxable under Section 5(2) and Section 9(1) of the Act deems all income from a business connection in India as accruing in India. The appellant disagreed with ITAT's assessment of transactions between the assessee and LGEIL as at arm's length.During the proceedings, the Supreme Court's rulings in cases involving foreign AEs were referenced. The Supreme Court's decisions in cases related to Permanent Establishment in India were highlighted, emphasizing the absence of PE in India for certain entities. The Court noted that re-assessment proceedings were initiated against the respondent-assessee based on the presence of PE in India, which contradicted the findings in a previous case involving LGEIL. The Court questioned the inconsistency in the appellant-Revenue's stance on PE in India for different cases.The Court observed that entertaining the present appeal would essentially challenge the Supreme Court's judgment in a related case, deeming the proceedings infructuous post the Supreme Court's decision. Citing the duty of the Court to act in the interest of justice, including disposing of futile litigation, the Court dismissed the appeal for lacking substantial legal questions. The Court emphasized the need to upload the order promptly and forward copies to the concerned parties for compliance.
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