2024 (10) TMI 661

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....consideration: - "A. Whether on the facts and circumstances of the case, the Ld. ITAT erred in holding that assessee company does not have existence of dependent PE in India? B. Whether on the facts and circumstances of the case, the Ld. ITAT erred in ignoring the facts that the assessee company has a fixed place PE in India? C. Whether on the facts and circumstances of the case, the Ld. ITAT erred in holding that since KIPL has been remunerated by the assessee for commission activities on arm's length basis, no further attribution is required in lieu of law laid down by the Hon'ble Supreme Court in the case of Morgan Stanley 292 ITR 416 despite the fact that M/s Krones India Pvt. Ltd. (KIPL) is performing functions which ar....

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.... while examining the issue of DAPE. We deem it apposite to extract the following from the order passed by the AO:- "As already discussed supra, KIPL was undertaking activities/ functions that were beyond the scope of activities leading to earning of commission. KIPL was actively involved in completion of various agreements entered into by Krones AG by way of installation/ commissioning of machineries/ after sales service etc. To claim that KIPL has been adequately compensated at arm's length in view of the fact that no adverse inference is drawn by the Transfer Pricing officer is also not acceptable. It was not possible for the TPO to comment on the actual functions carried out by KIPL in the capacity of the dependent agent PE of the ....

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....question of attribution would have arisen, the aforesaid findings clearly pale into insignificance. 8. Insofar as the other findings, to which our attention was drawn by Mr. Kumar, we note that the AO had itself found that the work of Pepsico, Jainpur project was one which was awarded to KIPL and that the respondent-assessee had only affected certain supplies. 9. More fundamentally, we take note of the following conclusions which have come to be rendered by the Tribunal: - "18. A perusal of the agreement shows that KIPL does not carry out any manufacturing or processing activity in India using intangibles of the assessee and therefore, assumption of the Assessing Officer is factually incorrect. It further comes out from the agreement th....

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....tutes the agreement of the other enterprise to supply goods or merchandise under the terms and conditions specified in the order and further the other enterprise takes actions that give purchasers the basis for a reasonable belief that such person has authority to bind the other enterprise. 22. We are of the considered view that KIPL is only undertaking marketing enterprise and contracts are finalized by the assessee and signed by the assessee outside India. Therefore, KIPL cannot be said to be habitually securing and concluding order on behalf of the assessee. xxxx xxxx xxxx 24. It can be seen from the financials that the commission income of KIPL is only Rs. 6,74,61,516/- on total revenue of Rs. 59,08,86,477/ - which comes to aro....