TaxTMI 
TaxTMI 
2022 (12) TMI 700
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.... re-filing the appeal. 2.1 According to the appellant/revenue, there is delay of 90 days. 3. For the reasons given in the application, the delay is condoned. 4. The application is disposed of in the aforesaid terms. ITA 503/2022 5. This appeal is directed against the order dated 07.12.2021 passed by the Income Tax Appellate Tribunal [in short "Tribunal"]. 6. The appellant/revenue has proposed, for consideration of this Court, the following questions of law: "A. Whether on the facts and in the circumstances of the case and in law, the Ld. ITAT erred in holding that the assessee does not have a permanent establishment within the meaning of Article 5 of the India-Finland Double Taxation Avoidance Agreement? ....
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....ittedly covered by the decision of the Supreme Court rendered in Engineering Analysis Centre of Excellence Private Limited vs. Commissioner of Income Tax and Anr. (2022) 3 SCC 321. 9. This brings us to the remaining questions of law, as proposed by the appellant/revenue i.e.,'A' and 'B'. 10. We may note, that the impugned order passed by the Tribunal has proceeded on the basis, albeit on a demurrer, that the respondent/assessee has a Permanent Establishment ["PE"] in India, and thereafter gone on to discuss, as to whether any profits could be attributed to it. 11. The Tribunal has returned a finding of fact, that the respondent/assessee recorded a "global net loss" in the relevant assessment year, and therefore no profit could have....
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....fit or income attributable to the P.L. There are losses in both years as per the audited accounts. PB- Volume A of Compilation page 164, at 169 and page 180 at 185. 21. The relevant portion of the said Special Bench Judgment is quoted herein below (page 287 of Volume C, at page 949-950): "287 .... Taking all these into consideration, we consider it fair and reasonable to attribute 20% of the net profit in respect of the Indian sales as the income attributable to the PE: The following steps are involved in computing the income attributable to the PE: First the global sales and the global net profit have to be ascertained. From the accounts presented before us as well as before the Income-tax authorities, t....
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....pellant viz. ZTE, Huawei and Nortel. Each of these assessees was engaged in the supply of telecom equipment to Indian telecom operators. The ITAT order passed in the case of Notel specifically records that in the cases of each of these two assessees, the revenue had adopted the Net Profit rate of the foreign enterprise for determining the amount of profit income which was attributable to each enterprise's respective P.E. 23. Hence, applying the said Special Bench Judgment to the facts of the present case, as the Appellant has globa1 net loss as per its audited accounts, no profit or income can be attributed to the assessee in India. 24. To mention Special Bench ruling is in line with the provisions of Article 7(1) of t....
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....ted accounts instead of the net profit margins. The gross profits margins of the Appellant Company for 2009 and 2010 were positive, and that was how the A.O. could attribute profits to the P.E. In so adopting the gross profit margins of the Appellant Company, the A.O. has acted in a manner which is directly contrary to Article 7(1) of the DTAA and also contrary to the said Special Bench Judgment. It is the Net Profits margins which are to be considered as for attribution as per the DTAA. 28. The computation made by the A.O. in his assessment order is incorrect as the AO has not allowed the payments made by the Appellant to NSN India for the services rendered by NSN India as a deduction from the profit attributable to the alleged PE....