Dependent agent permanent establishment denied where the Indian company acted independently and royalty income escaped Indian tax.

Where the material facts were unchanged from earlier years and the Indian company acted independently, no dependent agent permanent establishment arose in India. The Tribunal followed its consistent view in the assessee's own case, found no contrary decision, and held that the royalty income could not be taxed in India on the basis of agency PE attribution. The foreign enterprise therefore remained outside Indian taxability on this ground.

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Issues: Whether the assessee had a dependent agent permanent establishment in India so as to render the royalty income taxable in India.

Analysis: The assessee's case in the year under appeal was found to be identical to the earlier assessment years in which the Tribunal had held that the Indian company acted independently and did not constitute an agency permanent establishment of the assessee. No contrary decision was shown. The directions of the Dispute Resolution Panel noted the earlier year position, but the consistent view in the assessee's own case for preceding years was followed.

Conclusion: The issue was decided in favour of the assessee. The Indian company was not treated as a dependent agent permanent establishment, and the royalty income was not brought to tax on that basis.

Ratio Decidendi: Where the material facts remain unchanged and the Indian entity acts independently, no agency permanent establishment arises, and income attributable to foreign business outside India cannot be taxed in the absence of a permanent establishment.

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