2022 (10) TMI 1157

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.... 6.2 On the facts and circumstances of the case and in law, the Learned AO as well as the Hon'ble DRP erred in not appreciating that no portion of profits, if any, accruing to Appellant from off shore sale of terminal equipments to Indian customers can be attributed to the alleged PE in India given the nature of equipment, customer profile and modalities of undertaking sales. 6.3 On the facts and circumstances of the case and in law, the Learned AO has erred in proposing and the Hon'ble DRP has erred in confirming arbitrary estimation of profits to the extent of 725 percent on offshore sales of equipments in the hands of the Appellant in India while completely disregarding the global operating margin of the Appellant for the year under consideration. 6.4 On the facts and circumstances of the case and in law, the Learned AO as well as the Hon'ble DRP erred in not appreciating that as the alleged PE of the Appellant has been remunerated at arms' length price and the same has also been confirmed by Transfer Pricing Officer ('TPO') in his order dated January 29, 2013, no further income could be attributed and assessed to tax in India, ....

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.... 7. We have given thoughtful consideration to the orders of this Tribunal. We are of the considered view that for the limited purpose of adjudication of Ground No. 6 with its sub-grounds and Ground No. 7, needs to be re-adjudicated as there is a mistake apparent from record in not adjudicating the captioned grounds. Therefore, for this limited purpose, the captioned order of this Tribunal is recalled for the captioned A.Ys for the adjudication of Ground Nos. 6 and 7 in their true perspective. 8. Registry is directed to list the appeals for hearing of Ground Nos.6 and 7 on 08th February, 2022 and inform the parties accordingly." 3. Pursuant to the above recall order, we have heard both the parties and perused the records. As regards ground no.6 is concerned, we note that the said ground of appeal no.6 comprised of following issues: "6.1 On the facts and circumstances of the case and in law, the AO as well as the Hon'ble DRP erred in not appreciating that that since no part of activity relating to sale of network equipment and terminal equipments was carried out by the Appellant in India, the question of attributing-any income in India d9cs not arise.....

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....ome to India did not arise. 6.2 On the facts and circumstances of the case and in law, the Learned AO as well as the Hon'ble DRP erred in not appreciating that no portion of profit, if any, accruing to appellant from offshore sale of terminal equipment to Indian customers can be attributed to the alleged PE in India given the nature of equipment, customer profile and modalities of undertaking sales. 6.3 On the facts and circumstances of the case and in law, the learned AO as well as the Hon'ble DRP erred in not appreciating that as the alleged PE of the appellant has been remunerated at arm's length price, no further income could be attributed and assessed to tax in India, in the hands of the appellant." 6. After adjudicating the issue, the Tribunal had concluded that "accordingly, ground nos.5 & 6 of the assessee's appeal are rejected." Hence, it is clear that the Tribunal has categorically rejected this ground no.6 which naturally is inclusive of its sub-grounds. In this regard, the Ld. DR has pointed out in her note as under "1. In this regard it is submitted that the issue of attribution of profit to the PE including attribution of profits despite ....

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.... of the assessee have jointly prepared bidding documents 10 ITA- 5253/Del/2011 & others for contracts, negotiated and concluded the contract on behalf of the assessee with its Indian customers. He has also recorded the finding that the employees of Huawei India form the sales team of the assessee. Such employees have habitually secured orders in India wholly or almost wholly for the assessee. Various documents found during the course of survey in the form of agreements, purchase orders, copies of contract prove the active involvement of employees of Indian company in the conclusion of contracts on behalf of the assessee. All these facts recorded by the Assessing Officer and upheld by the DRP have not been controverted before us. In view of the above, we do not find justification to interfere with the order of learned DRP in this regard. Accordingly, ground Nos.5 & 6 of the assessee's appeal are rejected. " The Hon'ble Tribunal not only upheld the existence of business connection and PE in India but also rejected the ground raised by the assessee on account of attribution of profits. 1.2 Further, in Para 29 & 30 of the order dated 21.03.2014, the Hon'ble ITAT summe....