TaxTMI 
TaxTMI 
2025 (8) TMI 686
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.... Brief facts of the case as coming out from the orders of the authorities below are that the assesse is a non-resident company incorporated/established in Japan in 1950. It is engaged in the business of manufacturing and sale of functional engineered materials and electronic materials. It also engaged in extractions of non-ferrous metal smelting, minerals resource development, precious metal recycling, raw material related business, manufacturing and sale of automotive parts/component etc. The assessee company is having a subsidiary in India, Mitsui Kinzoku Components India Private Limited [hereinafter referred to as ('MKCI')]. The subsidiary of India is engaged in the business of manufacturing Catalytic convertors and selling catalytic....
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....ents of seconded employees between assessee and the India subsidiary held that the employees of the assessee were exercising complete control over the physical premises of the Indian subsidiary and also carrying out sales operations in India and, hence, the assessee is having Permanent Establishment (PE) in India. The Ld. AO further took a view having regard to the fact that the assessee is having full control over the premises and structure of Indian Subsidiary the Indian subsidiary constitute the PE of assessee in terms of Article 5 of India Japan Treaty. 3. Aggrieved with the order of the AO, the assessee filed an appeal before the DRP and argued that the view of the AO that by arranging seconded employees, for the purposes of smooth ....
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....n 153(4) of the Income Tax Act, 1961 (the Act'), thereby making the assessment proceedings barred by limitation. 2. On the facts and in the circumstances of the case, the Ld. AO and Ld. DRP have erred in concluding that Appellant Company constitutes Fixed Place Permanent Establishment (PE) in India under the Act as well as Article 5 of India-Japan Tax Treaty through its employees seconded to Indian Subsidiary Company, working from the office spaces of such Indian Subsidiary Company. 2.1. On the facts and in the circumstances of the case and in law, the Ld. AO and Ld. DRP have erred in concluding that the Appellant Company is de-facto controller and actual employer of employees seconded to Indian Subsidiary Company te M....
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....s would be carried on by such entity, if anyone conditions is absent then there cannot be any PE in India. 7. Ld. Counsel for the assessee further drawn the attention to the Bench to the secondment employee's agreement appointment letters given by the India entity to the seconded employee, letter of release given by the Assessee before transferring those employees to India and argued that the view of the AO as affirmed by the DRP is not legally tenable. Ld. Counsel for the assessee has also filed the synopsis in order to assist the Bench has relied upon various judgments of the High Courts as well as the Tribunal. 8. Ld. DRP relied upon the orders of the authorities below i.e., the Assessing Officer and the DRP. 9. We have hear....
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.... and the secondment employees. We further observe, that the MKCI is the sole controlling authority, and can exercise determination of their (secondment employees) services. It is further clarified that Clause 5.5 of the agreement that the assessee is not at all responsible for the losses, if any, occurred to the India entity due to the action of secondment employees. In other words, the vicarious liability of assessee vis-à-vis damaged caused by the secondment employee is not there at all. Similarly, clause 5.6 of the agreement clarified that assessee will not have any right to use, maintenance of disposal of any structure or asset of MKCI or any right over any employee of MKCI. All these clauses when perused would prove beyond doubt....