Permanent Establishment unresolved in MAP settlement leads to remand for fresh tax adjudication.

A Mutual Agreement Procedure resolution under the India-USA tax treaty recorded no determination on whether the non-resident had a Permanent Establishment in India and dealt only with attribution of profits for specified years. Because the PE issue remained open and the later MAP communication had not been placed before the Tribunal, the earlier orders based on the assumption that prior-year findings continued to apply could not stand. The Tribunal's orders were therefore set aside and the matters remanded for fresh adjudication, with all rights and contentions left open.

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Issues: Whether the Tribunal's orders could be set aside and the matters remanded for fresh adjudication in view of the later Mutual Agreement Procedure resolution, where no determination was made on the existence of a Permanent Establishment and only profit attribution was agreed.

Analysis: The communication issued under Section 90 of the Income-tax Act, 1961 read with Article 27 of the India-USA Double Taxation Avoidance Convention and Rule 44H of the Income-tax Rules, 1962 recorded that the competent authorities had made no determination on whether the non-resident had a Permanent Establishment in India. The resolution proceeded only on attribution of profits for specified years and expressly left the PE question untouched. Since the Tribunal had proceeded on the assumption that its earlier view for prior assessment years continued to govern, and the subsequent MAP resolution had not been placed before it, the existing orders could not be sustained without reconsideration.

Conclusion: The Tribunal's orders were set aside and the matters were remanded to the Tribunal for consideration afresh, with all rights and contentions left open.

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