TaxTMI 
TaxTMI 
2024 (12) TMI 911
X X X X Extracts X X X X
X X X X Extracts X X X X
.... connection and a Permanent Establishment in India as per the provisions of section 9(1)(vii) of the I.T. Act and the relevant tax treaties. It was also seen from Form No. 3CEB report that the assessee company (HCIL) made a number of various kinds of payments to the parent company and other affiliate companies/ associated enterprises. The assessee company made such payments totalling Rs. 1057,30,04,248/- during the financial year 2005-06 relevant to A.Y. 2006-07. The above said payment's represented business/ trading receipts in the hands of the recipient companies and since the recipient companies had a business connection and a PE in India, the assessee was liable to deduct tax thereon u/s 195 of the I.T. Act which the assessee had failed to do. As the assesee had failed to deduct tax u/s 195 of the I.T. Act on the above said payments, the provisions of section 40(a)(i) were clearly attracted and the amount of Rs. 1057,30,04,248/- claimed as expenditure was liable to be disallowed u/s 40(a)(i) of the I.T. Act." 3. For the purposes of evaluating the challenge which stands raised, we deem it appropriate to notice the facts as obtaining in WP(C) 1936/2014. It is disclosed from the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....held that they do not have any income chargeable to tax in India and hence, there is no liability to deduct TDS u/s 195 Further, we wish to submit that the department has not filed an appeal against the above DRP directions and accepted the position that other Honda affiliate entities are not having PE in India (even when DRP order was appealable). Also, post DRP directions, the Ld. AO has held that there is no PE and hence, no income chargeable to tax in India in case of other Honda affiliate entities for other A Y and also dropped the 148 proceedings in case of rest of the other Honda affiliate entities. The DRP orders in placed on record. Since the payees do not have PE in India, the income is not chargeable to tax in India as per the provisions of DTAA. Thus, in absence of any taxable income, there is no liability for payer to deduct tax as held by Hon'ble SC in case of GE India Technology Centre vs CIT (2010)(10 SCC 29) has held that unless the payees are held to be taxable in India payer cannot be held responsible for not deducting appropriate taxes. Honda Trading Asia Co. Ltd. ("HTAS") does not have a PE in India Assessee further submitted as under: Based on th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tax as held by Hon'ble SC in case of GE India Technology Centre vs CIT (2010)(10 SCC 29) has held that unless the payees are held to be taxable in India payer cannot be held responsible for not deducting appropriate taxes. After considering the assessee's submission carefully it has come to noticed that there has been significant legal development in the matters of HMJ and its affiliates since 2010. On the basis of Findings of the ITAT order ITA Nos.2056 & 3229/Del/2014 for A.Y.2009-10 it can be concluded that all transactions between HCIL and HMJ and its affiliates had been determined at arm's length basis. "TPO has passed the order after the surveys were conducted on the assessee. If the AO had certain additional material facts, he could have brought it to the notice of the TPO and asked for afresh report. In our view, this argument of the Ld. D.R. is erroneous, as the revenue wants to take a stand that the transactions between the assessee and its AE are not at arm's length for the limited purpose of denying the benefit of the non-discrimination article in the DTAA to the assessee and not for making any additions under the transfer pricing provisions. Year after....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onstitute a PE, there must be a fixed place of business available to the assessee, through which the business of assessee is wholly or partly carried on. In the preceding paragraphs we held that what the expat employees are doing is only the discharge of the functions of subsidiary towards the holding company, which is for the benefit of the business of the subsidiary to make the GBM understand the priorities and preferences of the Indian customers by providing India specific Information to GBM's which in turn then carry out research and development to develop India specific products. By no stretch of imagination could it be said that it is in furtherance of the business of the assessee de hors the business of the subsidiary. In the absence of proof as to any management activity of the assessee being conducted in India or that it is established that the decisions relating to the products to be manufactured, pricing in the domestic markets, or the decisions relating to the launch of such products in India is taken by the assessee, we find it difficult to agree with the authorities below that through the expatriate employees the assessee has been conducting the business of asse....