Dependent agent permanent establishment fails where no transaction or business nexus is proved; FTS and profit attribution additions collapse.

SanDisk India was found not to constitute a dependent agent permanent establishment for the relevant year because the record did not show any related party transaction during the period, and the alleged survey material arose only after the acquisition date. The revenue also failed to produce documentary evidence that SanDisk India provided marketing support or acted on the assessee's behalf. In the absence of an established transaction or business nexus, the treatment of reimbursements as fees for technical services and the attribution of 30% of profits to India were held unsustainable, and the issue was decided in favour of the assessee.

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Issues: Whether SanDisk India constituted a dependent agent permanent establishment of the assessee in India for the relevant year and whether the resulting additions by way of fees for technical services and profit attribution were sustainable.

Analysis: The record showed that the assessee acquired SanDisk Corporation only on 12.05.2016, after the period relevant to assessment year 2016-17. The material placed on record, including the transfer pricing documentation and financial statements, did not establish any related party transaction between the assessee and SanDisk India during the year under consideration. The survey material relied upon by the revenue arose after the acquisition date and could not, by itself, establish a pre-existing relationship for the relevant year. The revenue also failed to produce documentary evidence showing that SanDisk India rendered marketing support services to the assessee or acted on its behalf so as to create a dependent agent permanent establishment. In the absence of any established transaction or business nexus, the additions treating reimbursement as fees for technical services and attributing 30% of profits to India could not stand.

Conclusion: SanDisk India was not a dependent agent permanent establishment of the assessee for assessment year 2016-17, and the additions towards fees for technical services and profit attribution were unsustainable. The issue was decided in favour of the assessee.

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