Arm's length remuneration bars further profit attribution to a dependent agent permanent establishment, while TDS credit requires verification.

Where an Indian agent is remunerated at arm's length for the functions performed, assets employed and risks assumed, no further profit is ordinarily attributable to the foreign enterprise merely because a dependent agent permanent establishment is alleged to exist. Applying binding coordinate bench rulings and jurisdictional High Court principle, the Tribunal deleted the addition made on profit attribution. On the TDS credit claim, the matter was remitted to the Assessing Officer for factual verification and grant of credit in accordance with law, with the ground allowed for statistical purposes.

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Issues: (i) Whether any further profit could be attributed to the alleged dependent agent permanent establishment where the Indian agent was remunerated at arm's length; (ii) whether the assessee was entitled to relief on the claim for TDS credit.

Issue (i): Whether any further profit could be attributed to the alleged dependent agent permanent establishment where the Indian agent was remunerated at arm's length.

Analysis: The disputed addition arose from the Assessing Officer's view that the Indian distributor constituted a dependent agent permanent establishment of the foreign enterprise and that profits were further attributable in India. The Tribunal followed the binding coordinate bench rulings in the assessee's own case and the jurisdictional High Court principle that, where the Indian agent is compensated at arm's length for the functions performed, assets employed, and risks assumed, no further profits remain attributable to the foreign enterprise merely because a dependent agent permanent establishment is alleged to exist.

Conclusion: The issue was decided in favour of the assessee, and the addition on account of profit attribution to the alleged dependent agent permanent establishment was deleted.

Issue (ii): Whether the assessee was entitled to relief on the claim for TDS credit.

Analysis: The Tribunal noted that the claim required factual verification by the Assessing Officer and that the credit had to be granted in accordance with law after necessary examination of the record.

Conclusion: The issue was restored to the Assessing Officer for verification and consequential grant of credit, with the result that the ground was allowed for statistical purposes.

Final Conclusion: The appeal succeeded on the substantive transfer-pricing attribution dispute, while the TDS-credit claim was sent back for verification, leaving the assessee with partial relief overall.

Ratio Decidendi: Where an Indian agent has been remunerated at arm's length, no further profit can ordinarily be attributed to the foreign enterprise solely on the basis of an alleged dependent agent permanent establishment.

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