TaxTMI 
TaxTMI 
2018 (4) TMI 1515
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....umstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee does not have Permanent Establishment (P.E.) in India and accordingly its business are not taxable in India. (2) On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in holding that no interest U/s. 234B is payable by a non - resident whose total income is subject to deduction of tax at source and accordingly deleting the interest charge u/s 234B of the IT Act 1961. (3 The Appellant prays that the order of CIT(A) on the above grounds be set aside and that of the A.O. restored." 3. In the Cross objection filed by the assessee, assessee challenged the order of the Ld.CIT(A) on following grounds: - "1. Without prejudice to the de....
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.... in the hands of the assessee, is decided in favour of the assessee in assessee's own case for the A.Y. 2007-08 by the Coordinate Bench of the Tribunal in ITA No. 8862/Mum/2010 by order dated 17.11.2017 following the decision of the Hon'ble supreme Court in the case of CIT v. E-funds I.T. Solutions Inc., in Civil Appeal No. 6082 of 2015 dated 24.10.2017. 5. Ld. Counsel for the assessee submitted that following the decision of the Hon'ble supreme Court, the Coordinate Bench held that once no income is chargeable to tax in India is attributable to the assessee for the reason that the transaction between the assessee and its AE has been found at arm's length price, no further income chargeable to tax in India can be said to be attributable on....
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....e, no further income chargeable to tax in India can be attributable to the assessee for the reason that the transaction between the assessee and AE has been found at arm's length price. For this the learned Counsel for the assessee relied on the decision of Hon'ble Supreme Court in the case of ADIT vs. E-Funds IT Solution Inc. in Civil Appeal No. 6082 of 2015 vide order dated 24.10.2017 wherein vide Para 22 reads as under: - "22. Shri Ganesh has referred to and relied upon an order of the Additional Taxation Commissioner, who is the Transfer Pricing Officer. The said order is dated 22nd February, 2006 and states as under: "The taxpayer company filed its return of income with ACIT Circle 11(1), New Delhi. A reference was received from th....
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....nsactional Net Margin Method (TNMM) in respect of all the major international transactions. After examination of the documentation and discussion with the authorized representative of the assessee, no adverse inference is drawn in respect of the Arm's Length Price (ALP) of the international transactions, as declared by the assessee in Form 3CEB, annexed to the return of the Income." Shri Ganesh is correct in stating that as the arm's length principle has been satisfied in the present case, no further profits would be attributable even if there exists a PE in India. This was specifically held in Morgan Stanley (supra) as follows: "32. As regards determination of profits attributable to a PE in India (MSAS) is concerned on the basis of ....
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....equates an arm's length analysis (ALA) with attribution of profits. It holds that once a transfer pricing analysis is undertaken, there is no further need to attribute profits to a PE. The impugned ruling is correct in principle insofar as an associated enterprise, that also constitutes a PE, has been remunerated on an arm's length basis taking into account all the risk- taking functions of the enterprise. In such cases nothing further would be left to be attributed to PE. The situation would be different if transfer pricing analysis does not adequately reflect the functions performed and the risks assumed by the enterprise. In such a situation, there would be a need to attribute profits to PE for those functions/risks that have not been co....
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....the transaction between the assessee and its AE has been found at arm's length price in the present case on the issue of agent for space selling, there is no requirement for dealing with the issue of, whether there is PE or not and no addition on this count can be made in the case of assessee. When these facts were confronted to the learned CIT Departmental Representative, he fairly conceded the position as regards to alternative contention of the assessee. 7. After hearing rival contentions and gone through the facts and circumstances of the case. We find that the alternative contention made by the assessee that once no income chargeable to tax in India is attributable to the assessee for the reason that the transaction between the asses....