Arm's-length commission bars further profit attribution to an Indian permanent establishment absent changed facts or law.

Where an Indian agent's commission for sales support services has been accepted at arm's length, no further profit attribution to the foreign enterprise's Indian permanent establishment is warranted absent any change in facts or law. The tribunal noted that the same arrangement had already been accepted in the agent's assessment and that the issue had been decided in the assessee's favour in earlier years on the principle that arm's-length remuneration exhausts the taxable attribution in India. Following that recurring view, the addition for further attribution was deleted.

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Issues: Whether any further attribution of profits was warranted to the assessee's permanent establishment in India after the commission paid to the Indian agent had been accepted at arm's length.

Analysis: The assessee's Indian agent had been remunerated for sales support services, and the same arrangement had already been accepted at arm's length in the agent's own assessment. The issue had also been decided in the assessee's favour in earlier assessment years on the footing that once the agent's remuneration is accepted at arm's length, nothing further remains to be taxed in India by way of attribution to the foreign enterprise's permanent establishment. No change in facts or law was shown for the year under consideration, and the issue was treated as recurring.

Conclusion: No further attribution of profits to the permanent establishment was justified, and the addition made on this account was deleted.

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