TaxTMI 
TaxTMI 
2014 (5) TMI 517
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....ions with AEs? 4. Whether DRP is correct in law in holding that the AEs are domestic entities without any evidence to the fact that the business of the AEs is controlled and managed in India? 3. The assessee is a closely held limited company promoted by IJM Corporation, Berhad. The assessee is engaged in the business of works contracts, construction and maintenance of roads, bridges, townships, residential and commercial buildings. Return of income was filed by the assessee on 30-9-2009 declaring a total income at NIL. The case was selected for scrutiny and the case was referred to the Transfer Pricing Officer since during the year under consideration, the assessee company entered into transactions with the Associated Enterprises within the meaning of Section 92A and 92B of the Act. The Transfer Pricing Officer passed order u/s. 92CA(3) of the Act determining Arm's Length Price at Rs. 62,45,39,693/-. The Assessing Officer vide his draft assessment order dt. 20-3-2013 computed the total loss of the assessee at Rs. 15,45,41,576/- taking into account the adjustments of Rs. 62,45,39,693/- made in accordance with the Transfer Pricing Order (TP Order) passed u/s. 92CA(3) by the....
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....d., is a wholly owned subsidiary of IJM Corporation Berhad, Malaysia. IJM Corporation Berhad, Malaysia have their MCD project office in Delhi. During the financial year 2005-06, IJM Corporation Berhad, Malaysia MCD Project office had secured two contracts namely i) MCD project from Municipal Corporation of Delhi and ii) Sagar C-4 project from National Highway Authority of India for upgradation of existing road. The Delhi project office was established in India under the provisions of Section 592 of the Companies Act, 1956 and is considered as Permanent Establishment. Subsequently, the jobs secured by the IJM Corporation Berhad, Malaysia, MCD project office Delhi were sub-contracted to the Company and its subsidiary company on back to back basis by retaining very small margin of less than 3.2%. The IJM Corporation Berhad Delhi project office is filing its income tax return for its project office activities before the Income tax authorities Delhi. The Company had several joint ventures with other business entities. One of such joint venture entered by the Company is with IJM Corporation Berhad, Malaysia by name IJM-IJMII JV. The joint venture has secured three contracts from Delhi Me....
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....instant case. It cannot therefore be deemed that the transaction between the Company and IJM CORP MCD PROJECT OFFICE DELHI, IJM-IJMII JV AND IJM-NBCC-VRM- JV are one between associated enterprises. Therefore, the basic condition for the existence of an international transaction is not satisfied. 8. The assessee further submitted that in the Company's own case relating to the Asst. year 2008-09, the Hon'ble Income Tax Appellate Tribunal, Hyderabad bench 'A', has categorically held that the transactions between the Company and PE Joint Venture do not fall under section 92 B(2) of the Act. And also the Hon'ble Income Tax Appellate Tribunal, Hyderabad bench 'A', has categorically held that, the transactions between Swarnandhra IJMII Integrated Township Development Co. Ltd., and the Company i.e, IJM (India) Infrastructure Ltd., do not fall u/s 92B(2) of the Income tax Act, 1961. 9. After considering the objections, the DRP observed as follows: "The Panel has considered the submissions of the assessee and it is noted that in the assesseecompany's own case relating to Asst. year 2008- 09, Hon'ble Income Tax Appellate Tribunal, Hyderabad bench &....
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.... 147 ITD 437 wherein the Tribunal held as follows: "PE should be treated as resident in India Moreover, under the provisions of DTAA with Malaysia, PE is treated as a separate legal entity, independent of its foreign principal enterprise. Further, Article 24 of the DTAA contains a non-discrimination provision. It prohibits a Contracting State from making any discrimination in the matter of taxation between its own national and a national of the other Contracting State, who are placed in similar circumstances. In other words, a Contracting State is obliged to provide the same tax treatment to a national of the other Contracting State as it would give to its own nationals. Article 3(h) of the DTAA defines the term "national" to include both-natural persons and artificial persons, such as companies, etc. Therefore, PE should be treated as resident in India inasmuch as the business profits attributable to PE are taxable in India and all business decisions relating to PE are entered and concluded in India. In other words, the control and management of the affairs of PE are situated in India, the PE should be treated as resident in India, treating PE otherwise amounts to violation ....