TaxTMI 
TaxTMI 
2017 (11) TMI 1642
X X X X Extracts X X X X
X X X X Extracts X X X X
....DIT) for the assessment year 2007-08 vide order dated 28-10-2010 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). 2. The only issue in this appeal of assessee is against the order of DRP/AO in holding that the assessee has a permanent establishment in India. For this assessee has raised following five grounds: - "1. The Hon'ble DRP / Ld. A.O. erred in Law and facts in holding that the assessee has a permanent establishment in India. The reasons given by them for doing so are wrong, contrary to the facts of the case and against the provisions of law. 2. The Hon'ble DRP / Ld. A.O. ought to have held that assessee has no PE in India and its income is not taxable in India. 3. The Hon'ble DRP....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that no adjustment on account of ALP of space selling is considered by TPO and once, no transfer pricing adjustment is made, 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 arms 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... eFunds group entities. The international transactions undertaken by the assessee were examined vis-a-vis the method applied by the assessee for arriving at the arm's length price. The assessee has relied on the Transactional 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 wou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... example Sections 44-BB, 44-BBA, etc.). 36. Under the impugned ruling delivered by AAR, remuneration to MSAS was justified by a transfer pricing analysis and, therefore, no further income could be attributed to the PE (MSAS). In other words, the said ruling 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 si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hus, ground No. 1 is dismissed." 6. In view of the above, the learned Counsel for the assessee argued that in case alternate arguments of the assessee is accepted that no further income chargeable to tax in India can be said to be attributable to the assessee for the reason that the transaction between the assessee and its AE has been found at arms 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. ....