AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (2) TMI 1327
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.... DRP, grossly erred, in alleging that Appellant has a Fixed place Permanent Establishment ("PE") for business in India, to carry on the business of sale of software products without indicating any basis for same. 3.1. Learned AO/ Hon'ble DRP have failed to provide even a vague indication on why contentions of Appellant are incorrect and further in substituting their own imaginary facts as basis for alleging that the Appellant has a Fixed place of business in India to carry on the business. 3.2. The learned AO in the impugned order erred in ignoring relevant and complete facts brought on record explaining Appellant's business with Indian entity and proceeded on unsubstantiated and imaginary presumptions to hold existence of PE and further perpetuated such error by attributing income on imaginary and baseless presumptions. 3.3. Learned AO erred and Hon'ble DRP erred in confirming existence of a Fixed place of business in India through NCR Corporation India Private Limited ("NCR India"), an independent legal entity conducting its own business, without indicating an iota of evidence to support that the place of business of NCR India is used or is at the disposal of....
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....rely by placing reliance on clause 6. 1(a) and 6. 1(b) of the Distribution Agreement in vacuum without appreciating the business model of the Appellant and NCR India. 5.2. Both learned AO/ Hon'ble DRP have erred, in law and on facts, by not passing a speaking order, not considering material brought on record and assuming facts without bringing on record any material to establish the allegations made against Appellant. 6. Without prejudice to the above grounds of appeal, learned AO/ Hon'ble DRP have erred, in law and on facts, in attributing income to alleged PE without indicating any valid basis, purely based on speculations and without taking cognizance of the fact that profits/ income earned in relation to activities in India (by alleged PE, i.e., NCR India), have already been offered to tax in India and which is at arm's length. 7. Without prejudice to the above grounds of appeal, learned AO/ Hon'ble DRP have erred, in law and on facts, in attributing the profit to the alleged PE in India, in an arbitrary manner and not as per the authorized OECD approach, which is based on a separate and distinct enterprise approach. 8. Without prejudice to the above....
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....nt portion of the said order is reproduced herewith:- 7. We have heard Ld. Authorized Representatives of the parties and perused the material available on record and gone through the orders of the authorities below. In respect of transfer pricing adjustment related to sale of software/hardware, the contention of the assessee are multifold. It is stated that the assessee has no fixed place/PE during the period in appeal. The entire sale was executed at off shores and without prejudice, it was submitted that the impugned transaction of sale of software/hardware that was executed outside India to group company in India i.e. NCR Corporation India Pvt. Ltd. were subjected to transfer pricing scrutiny in the hands of alleged PE and were accepted to be at arm's length. Therefore, nothing further would be attributable to the alleged PE in India. In respect of this contention, reliance is placed on the judgement of the Hon'ble Supreme Court in the case DIT vs Morgan Stanely & Co. (2007) 292 ITR 416 (SC). It is contended that in the facts and circumstances of the present case, the AO was not justified in making the transfer pricing adjustment. Consequently, making addition of Rs. 43,91,20,....
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....ns of the multinational enterprise. In such a case nothing further would be left to attribute to the PE. The situation would be different if the transfer pricing analysis does not adequately reflect the functions performed and the risks assumed by the enterprise. In such a case, there would be need to attribute profits to the PE for those functions/risks that have not been considered. The entire exercise ultimately is to ascertain whether the service charges payable or paid to the service provider (MSAS in this case) fully represents the value of the profit attributable to his service. In this connection, the Department has also to examine whether the PE has obtained services from the multinational enterprise at lower than the arm's length cost? Therefore, the Department has to determine income, expense or cost allocations having regard to arm's length prices to decide the applicability of the transfer pricing regulations. 34. Economic nexus is an important aspect of the principle of Attribution of Profits. 35. In the light of what is stated above, the impugned ruling by AAR stands modified to the extent indicated hereinabove. Accordingly, both the civil appeals filed....
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.... premature hence, dismissed. 12. In the result, the appeal of the assessee is partly allowed. ITA No.1776/Del/2022 [Assessment Year: 2019-20] 13. Now, we take up assessee's appeal in ITA No. 1776/Del/2022 pertaining to Assessment Year : 2019-20. The assessee has raised following grounds of appeal:- "Based on the facts and circumstances of the case and in law, NCR Global Solutions Limited ("NCR GSL" or "the Company" or "the Appellant") respectfully craves, leave to prefer an appeal under Section 253(1)(d) of the Income-tax Act, 1961 ("the Act") against final assessment order dated 9 June 2022 ("impugned order") (received by the Company on 10 June 2022) issued under Section 143(3) read with Section 144C(13) of the Act, by the Deputy Commissioner of Income-tax, Circle2(2)(2), International Tax, New Delhi ("Ld. AO") purportedly in pursuance of the Directions dated 17 May 2022 issued under Section 144C(5) by the Dispute Resolution Panel -2 ("Ld. DRP"), New Delhi, interalia on the following grounds which are without prejudice to each other: 1. That ld. AO/ Ld. DRP erred, in law and on facts, in computing the total income of the Appellant at INR 86,99,01,785 as against return....
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.... is acting as an agent on behalf of the Appellant and thus, the Appellant has an Agency PE in India without any factual foundation / citing any basis. 4.1. The Ld. AOI Ld. DRP has failed to prove on facts or provide any cogent reason or basis for concluding that the Appellant has an Agency PE in India. 4.2. The Ld. AOI Ld. DRP has erred, in law and on facts, in alleging Agency PE on the surmise that NCR India works mainly or wholly on behalf of the Appellant, NCR India has authority to conclude contracts on behalf of the Appellant and NCR India habitually secures orders in India, mainly or wholly for the Appellant. 4.3. Impugned order has failed to appreciate that business activities undertaken by the Appellant and NCR India are on principal-to-principal basis and that NCR India is not an agent appointed by the Appellant. 5. Ld. AO/Ld. DRP has failed to discharge the burden of proof while arbitrarily holding that Appellant has a place of business in India and that NCR India has satisfied the conditions to be treated either as a Fixed place PE or has an Agency PE in India. 5.1. Lo. DRP has erred in law and on facts, in placing reliance on its directions issued for AY ....