TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 757
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....deration on 11.03.2022 declaring total income of Rs. Nil. The assessee is a part of CISCO Group, and offers an integrated suite of products including the following four key applications: • Application Performance Monitoring ("APM") platform, • End user Monitoring, • Infrastructure Visibility, and • Application Analytics. Each of these key applications are offered on a subscription or perpetual license basis, with the majority of sales coming from subscriptions. Post the acquisition of AppDynamics group, AppD International became the distributor of Cisco products. AppD International is a non-resident foreign company incorporated in the United Kingdom, engaged in the sale of off-the-shelf....
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....nd 25.75% of the said amount being Rs. 9,51,51,970/- was attributed to the PE in India and taxed in the hands of the assessee @ 40% plus applicable surcharge and cess. 6. Aggrieved, the assessee went in appeal before the DRP which concurred with the AO finding. The DRP took note of the fact that the assessee had filed some additional evidences in the shape of invoices raised by the AppD India which was not examined by the AO in the remand stage despite being given directions for examination of the invoices as to whether they were confined to marketing and sales support services or also included charges for technical assistance, administrative support services, advanced services, logistic services as mentioned in the intercompany agreemen....
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....dia-UK DTAA. We find that the AO has examined the International Service Agreement (ISA) between AppD International, the assessee service recipient and AppD India, the Indian entity and service provider dated 05.12.2017. The AO after perusal of the list of activities to be provided by the service provider came to the conclusion that AppD India is a captive service provider, performing much more than just marketing services as the ISA provides for AppD India engagement in technical support services, administrative support services, logistical services etc also. Further, the AO held that the TP study report of AppDynamics India Private Limited clearly shows that AppD India was a captive service provider for AppDynamics international which indi....
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....int undertaking. This part of agreement shows that AppDynamics India is an independent contractor both legally and economically as it employes its own resources and provides similar services to other parties such as being engaged into provision of software development services to CISCO which constitutes almost 60% of the total revenue for AppD India. Further we note that Para 3 of the ISA shows that the AppD India performs its function in ordinary course of business while the marketing strategy is determined by AppD UK, it is AppD India which executes the strategy and perform necessary actions as it may deem fit in the normal course of business. 12. Lets now examine the applicability of Article 5 of the UK-India DTAA. For that we repr....
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....r for the enterprise and other enterprises which are controlled by it or have a controlling interest in it or are subject to same common control) he shall not be considered to be an agent of an independent status for the purposes of this paragraph. We find that to be a dependent agent, AppD India needs to undertake certain activities for AppD International as per para 4 of Article 5. We do not find that the AO has established that the conditions in Article 5(4) is satisfied. We find that that AppD India only identifies leads/ potential customers for the assessee and once the leads are identified, the assessee does the contractual negotiations for determining the rates, terms and condition of software/product sold to such customer. We als....