AI Drafter 
TaxTMI 
TaxTMI 
2024 (8) TMI 358
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....s and circumstances of each of the grounds of objections. Therefore, the directions issued by the Hon'ble Panel are bad in law and liable to be quashed. 2. Permanent Establishment 2.1. The Hon'ble Panel erred in upholding the action of the Deputy Commissioner of Income Tax International Taxation, Circle - 2(1) ['the Learned Assessing officer' or 'the Ld. A01 in not appreciating the fact that during the FY relevant to AY 2016-17, SanDisk India Device Design Centre Private Limited ('SanDisk India') and the Appellant were not associated enterprises. 2.2. The Hon'ble Panel and the Ld. AO erred in facts in not appreciating that there were no marketing support services rendered by SanDisk India to the Appellant during AY 201617. 2.3. The Hon'ble Panel erred in facts and in law in upholding the action of the Ld. AO in concluding that SanDisk India constitutes Dependent Agency Permanent Establishment ('PE') of the Appellant in India. 2.4. The Ld. AO erred in not considering the fact that in the absence of any transactions between SanDisk India and the Appellant, the question of Dependent Agency PE does....
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....ential thereto. 8.2. The Appellant craves leave to add to or alter, by deletion, substitution or otherwise, any or all of the above grounds of appeal, at any time before or during the hearing of the appeal." 2. Brief facts of the case are as under: 2.1 The assessee is a NR and a leading developer, manufacturer and provider of data storage devices and solutions. It is submitted that, the assessee's portfolio includes three primary offerings: * Datacenter Devices and Solutions; * Client Devices; and * Client Solutions. It is also submitted that the assessee markets its products under the WD brand and sells its products through distribution, retail, and direct channels worldwide. 2.2 It is submitted that, on 12.05.2016, the assessee completed its acquisition of the SanDisk Group. SanDisk India Device Design Centre Pvt. Ltd. ('SanDisk India'), a company registered in India was held by SanDisk Corporation, USA. Pursuant to the acquisition of SanDisk Corporation, USA by the assessee, SanDisk India's ultimate holding company changed from SanDisk Corporation, USA to the assessee before us. The assessee and SanDisk thus became part of the same....
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....assessee company has filed its comments/objections on the remand report vide their letter dated 30.11.2023. On perusal of the assessee objections and the AO report, the Panel is of considered view that the view taken by the AO has been fortified by the findings of the survey, where numerous evidences were gathered in this regard. The AO in the draft order as well as in remand report clearly brought out the facts of the case and abundantly established that Assessee Company is having DAPE in India in the form of San Disk India. Therefore, the Panel did not find any reason to interfere with the view taken by the AO. 5.1.6 Regarding profit allocation to the PE, the Panel is of the considered opinion that having concluded that SanDisk India is a PE of the assessee in India, considering that all Indian operations of the assessee arc connected with SanDisk India. The profit attribution is required to be made in the instant case. Further, the AO has relied on the case of Daikin Industries v ACIT (ITA No 1623 of 2015 New Delhi Income Tax Appellate Tribunal, May 28 2018) for attributing the profit to the PE of assessee. In the said judgment, ITAT Delhi had estimated profit at the ra....
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....ascertainable that SanDisk India had not rendered any services to assessee. It is submitted that the above fact was brought to the notice of the DRP as well as the assessing officer during the assessment proceedings. D) The Ld.AR placing reliance on Form 3CEB of SanDisk India submitted that, SanDisk India had not transacted with the assessee during the relevant year under consideration. He referred to clauses 13 and 19 of Form 3CEB and submitted that, SanDisk India made payments to SanDisk LLC, USA and other SanDisk group concerns and not with assessee. He thus submitted that there is no question of treating the amount paid to SanDisk LLC, USA as fee for technical services in the hands of assessee. E) The Ld.AR referring to the TP study of assessee submitted that, it does not have any reference to SanDisk India and any intercompany services between assessee and SanDisk India which is beyond the scope of report for financial year 2015-16. He thus submitted that for financial year relevant to AY 2016-17, assessee and SanDisk India were not even associated enterprises. He submitted that SanDisk India was captive service provider engaged in rendering software developm....
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....became the holding company of SanDisk India post 12.05.2016. It is noted that, during the survey proceedings, the employees of SanDisk India in marketing support service division, were administered on oath following which reassessment proceedings were initiated in the case of assessee for A.Y. 2016-17, based on the statements recorded of the employees. It is noted that the revenue proceeded on a fact that assessee transacted with SanDisk India even prior to the date of acquisition, which is unfounded and without any documentary support. 3.2 We have also perused in great detail the transfer pricing report, the financials of assessee as well as SanDisk India for assessment year 2016-17. It is noted that, no related party transaction is found to be existing between the assessee and SanDisk India. The transfer pricing study report of SanDisk India placed at page 201 with specific reference to page 205, reveals the transaction entered into between SanDisk India and SanDisk LLC, USA along with other group entities located in Israel, Malaysia, Ireland, Taiwan. 3.3 In respect of the transfer pricing documentation of assessee, we note that, the assessee undertakes recording of transac....
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....e [See section 92C(1)] (i) as per books of account (ii) as computed by the assessee having regard to the arm's length price Clause 19(a) Clause 19(b) Clause 19(c) Clause 19(d) 1 SanDisk LLC, USA 951, SanDisk Drive, Milpitas, California -95035, USA Reimbursement of employees' contribution to employee stock purchase plan 86,974,966 86,974,966 Other Method (Refer to note below) 2 SanDisk LLC, USA 951, SanDisk Drive, Milpitas, California -95035, USA Reimbursement of expat salary expense 36,694,537 36,694,537 Other Method (Refer note 2 & 3 below) Total 123,669,503 123,669,503 We hold that the above addition in the hands of assessee for year under consideration as FTS in the case shear non-application of mind by the revenue authorities. 3.7 It is noted that, the authorities have tried to make out a business connection between assessee and SanDisk India for the year under consideration by concluding that the marketing support services rendered by SanDisk India constitutes an agency PE of assessee in India. However, the authorities failed to appreciate for assessment y....
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.... OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION), CIRCLE-2(1), BENGALURU पता : ककà¥à¤·à¤¸à¤‚. 440, बी.à¤à¤®.टी.सी., à¤à¤µà¤¨, चौथी मंजिल, 80 फिटरोड, कोरमंगला, चेंगलà¥à¤°à¥- 95 (Address: Room No.440, BMTC Building, 4TH Floor,80ft Road, Koramangala, Bengaluru-95.) Ph. No. 080-25626363, Email: bangalore deit.it2. Ja incometax.gov.in F.No. Remand Report/DCIT(IT)/C-2[11/2023-24 सेवामें / To The Dispute Resolution Panel-2, Kendriya Sadan, 4th Floor, C Wing. Bengaluru-560034. Date: 23/11/2023 [Through Proper channel) Sir, 2. fu/Sub: Submission of remand report in the case of M/s Western Digital Technologies Pvt Ltd (PAN: AACCW9270F)- AY 2016-17 aily Ref: Letter vide DIN No. ITBA/DRP/F/17/2023-24/1057191379(1) dated 18/10/2023 Kindly refer to the above. In the case of the assessee company, M/s Western Digital Technologies....
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.... group in the AY 2017-18. However, the assessee has not submitted anything on record to prove the same. The assessee further claimed that San Disk India was not involved in such sales and did not provide any marketing support services to WDT during year. The assessee's contention that it is not availing marketing services from Indian entity is not acceptable as it has been established during survey that the Indian entity is acting as an agency PE and the ussesace has done sales in India. It is pertinent to note that the assessee has admitted for having made sales to India but categorically failed to establish its claim that the Sun Disk India was not involved in any marketing services. San Disk India has shown in its Transfer Pricing Memorandum for FY 2015-16 that there has been reimbursement of Expat Sulary expenses during the FY under consideration and there has been provision for Marketing Support Services by San Disk India during the FY 2015-16. However, there is no bifurcation of the services rendered AE wise Thus it is difficult to ascertain whether the contention of the चैनल क 210 assessee company rega....