AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 719
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.... years can be summarized as under:- GoA GoA No. [AY 18-19] GoA No. [AY 19-20] a. Assessment proceedings are bad in law and invalid N/A 1. b. Attribution of profits in respect of outbound and inbound shipments under Section 9(1)(i) of the Act and Article 7 of the Double Taxation Avoidance Agreement between India and Netherlands ('Treaty') 1. (1.1. - 1.3-) 2. (2.1. - 2.3) c. Arbitrarily assigning ad hoc ratios to origin country, transshipment and destination country- to compute taxable revenue attributable to the alleged PE of the Appellant in India 2. 3. d. Considering a deemed profitability rate of 2 percent despite losses incurred by the Appellant 3. 4. e. Not allowing a deduction of profits already taxed in the hands of the Indian AEs, whose activities are alleged to be creating a PE while computing income taxable in the hands of the Appellant. 4. (4.1. -4-2.) 5. (5.1-5-2) f. Not providing an opportunity of being heard to the Appellant 5. 6. g. On the facts and circumstances of the case, the learned AO erred in not granting the appropriate interest under Section 244A of the Act amounting to Rs. 11,51,739 On the facts and circumstances of the case, t....
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....in management, warehousing within the territory of India, custom clearance and other ancillary services, and has its operations spread across five business segments in India, ie, inbound, outbound, domestic services, support services and pricing related support services segments 8. TNT India is the local operating entity of the acquired TNT Group, in India, and is engaged in the business of courier and express services. Post-acquisition of TNT Express by FedEx Group, TNT India became part of FedEx Group. It is engaged in the business of international express distribution of freight, parcels and documents. In the course of its business operations, TNT India contracts with Indian customers to deliver freight, parcels and documents to destinations outside India, utilizing the services of the overseas Group Network. 9. In this regard, the assessee entered into a Transportation Services Agreement (TSA) with FETSC and TNT India. Pursuant to the said TSA, FETSCS and TNT India engaged the assessee for provision of transportation services outside India (i.e, from and to India), in respect of their respective customers' packages, against payment of International Transportation Fee (TTF....
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....sessee was directed to furnish its submissions on why the said Indian entities should not be considered as its PEs in India requiring attributing of profits in India. 13. Pursuant to the above, for AY 2018-19, the ld. AO made a reference to the TP Officer under Section 92CA of the Act, for determining the arms length price of the international transactions undertaken by the assessee, which included the transactions between the assessee and its alleged PEs in India. In light of the above, the ld. TP Officer passed the TP order dated 22.07.2021, under section 92CA (3) of the Act, without making any adjustments in respect of the assessee's international transactions with the Indian AES. 14. However, the AO concluded the assessment, alleging that the assessee has a business connection under section 9(1)(1) of the Act and a DAPE in terms of Article 5 of the India-Netherlands DTAA . The AO contended that FETSCS and TNT were acting as the Agents of the assessee in India, thereby constituting its DAPE and undertook profit attribution to the alleged India business of the assessee. Accordingly, the AO determined the revenue attributable to the India business by applying an ad hoc ratio....
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....orum Citation 1.Morgan Stanley & Co. Hon'ble SC 162 Taxman 165 2.E- Funds IT Solution Inc. Hon'ble SC 86taxmann.com 240 3.Honda Motor Co. Ltd., Japan Hon'ble SC 92 taxmann.com 353 4.Honda Motor Co. Ltd., -Japan [Review Petition] Hon'ble SC 108 taxmanu.com 300 5.Travelport Inc. Hon'ble SC 149 taxmann.com 470 6. Set Satellite (Singapore) Hon'ble Bombay High Court 307 ITR 205 7.BBC Worldwide Ltd. Hon'ble Delhi High Court 16 taxmann.com 162 8.Adobe Systems Incorporated Hon'ble Delhi High Court 69 taxmann.com 228 9. Asia Today Ltd. 1 Hon'ble ITAT, Mumbai 124 taxmann.com 1 10. ESS Advertising (Mauritius) SNC et Compagnie Hon'ble ITAT, Delhi 101 taxmann.com 312 20. On the other hand, ld. DR strongly relied upon the order of the ld. AO and ld. CIT (A) and submitted that once profit attribution is to be decided, then it has to be seen what are the functions performed as assets required and estimates while determining the transactions whose margin / profit are to be determined and ld. AO has correctly determined the revenue attributed to India business and the ratio for computing profits. 21. We have heard rival submiss....
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...., assessee has engaged its AE for transportation services within India in respect of its customer packages against payment of fee. Indian AEs are responsible for transportation delivery of the said packages from an Indian airport to its ultimate destination in India or from its origin in India to Indian airport. Likewise, the details of amounts paid by the assessee in the impugned assessment years are as under:- A.Y.2018-19 Amount (INR) LSF from FETSCS 15,52,68,802 LSF to TNT India 70,837,078 Total LSF paid to the Indian AES [A+B] 226,105,880 A.Y.2019-20 Amount (INR) LSF to FETSCS 1,83,65,06,785 LSF to TNT India 91,39,33,547 Total LSF paid to the Indian AES [A+B] 2,75,04,40,332 23. As per Article 7(2) of India-Netherlands treaty, not all the profits of foreign enterprises in India would be taxable in India and it is only those which have economic nexus with India. If compensation to the foreign enterprise in India is justified by FAR analysis and transfer pricing analysis and if it has been found to be at arm's length, then no further income should be attributed to its PE in India, because when for the same transaction, arm's length analysis has been undert....
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.... India is carried by the Indian AE whose activities have been held to be DAPE for the assessee and if such economic activities have been held to be at arm's length in the case of Indian AEs then it has to be reckoned to have been rightly rewarded, then nothing further survives to be taxed in India in the hands of the assessee. 26. It has been also brought on record that assessee has been subjected to TP adjustment and in the case of the assessee also the transactions have been found to be at arm's length and additionally one of the two Indian AEs have also been subjected to TP adjustment and its transaction with assessee also to be at arm's length and new adjustments have been made. 27. Before us, ld. Counsel had also brought on record and also showed from TP documentation for A.Y.2018-19 of the assessee and both the Indian AEs and also from the TP order of the assessee and TNT India for the same year, that the international transactions of the Indian AEs with the assessee, are at arm's length price wherein the mean margin determined based on five comparable companies in the case of both Indian AEs was 2.85% of income while the assessee has remunerated at a higher margin of 4% on....