TaxTMI 
TaxTMI 
2026 (1) TMI 414
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Tax (International Taxation), Circle- 1(1)(1), Delhi (Prescribed Income Tax Authority) on 31/05/2023 and duly served upon the assessee. Thereafter, notices under section 142(1) of the Act along with questionnaire were issued to the assessee. Response filed by the assessee are as per records. The Assessing Officer passed a draft assessment order (DAO) u/s 144C of the Act on 31.03.2024 proposing an addition of Rs. 23,11,82,270/- on supply of goods by the assessee to its subsidiary on account of the income attributable to the PE of the assessee in India. Aggrieved with the proposed addition, the assessee filed objections before the Ld. DRP. The Ld. DRP partly accepted the plea of the Assessing Officer as well as of the Assessee which is discussed in detail issue wise later in this order. After the receipt of the directions of the Ld. DRP, the Assessing Officer passed the final assessment order (FAO) u/s 143(3) r.w.s. 144C(13) of the Act on 29.01.2025, making an addition of Rs. 17,33,86,700/-. Aggrieved with the said order, the Assessee is in appeal before us. 2.1 Brief facts of the case are: The assessee SAIC Motor Corporation Limited (hereinafter referred to as 'SAIC') is a tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....peal is dismissed as not pressed. 5. Ground Nos. 4 to 4.1 of the Appeal are reproduced as under: "Re: attribution of profits on offshore supply 4. That on the facts and circumstances of the case and in law. the assessing officer erred in attributing profits on the goods sold by the appellant under offshore supply. 4.1. That on the facts and circumstances of the case and in law. the assessing officer erred in attributing profits on sale of goods by the appellant without appreciating that the title, risk and rewards related to the goods were transferred by the appellant outside India." 5.1 The AO in the DAO held that the receipts from offshore supply are taxable in India as per the provisions of the Act and as per the provisions of the India- China DTAA. 5.2 The AO held that there were no offshore sales conducted by the assessee because (i) the title of risk of the KD parts supplied by SAIC were never transferred outside India, rather it was transferred in India after completion of inspection process in presence of personnel designated by SAIC (ii) that SAIC had made certain purchase restrictions on MGMIPL with respect to KD parts and was not allow....
X X X X Extracts X X X X
X X X X Extracts X X X X
....py of invoices, bill of lading, copy of insurance, Affidavit in respect of no inspection carried out for the goods and opined that the sales conducted by the assessee were offshore sales. 5.6 The Ld. DRP noted that the main argument on the basis of which the AO had rejected the claim of offshore sale of the assessee was that the sales were completed on inspection of the parts by the employees of SAIC in India. It was stated by the AO that the personnel of SAIC were liable to inspect the shipped parts upon delivery after being unpacked by MGMIPL in India and compensate the buyer for any damage or other infirmities in the supplied parts. This observation of the AO was found to be incorrect by the Ld. DRP insofar all the documents as discussed by the Panel pointed towards the sale having completed offshore and bill of entry issued by Custom was the most important document which demonstrated that the sales were completed offshore. Further, the Ld. DRP noted that it was imperative to state that the clause of inspection is only to ensure that the goods received are in fine condition and in no way this clause could be instrumental in deciding the sales to be offshore or not. The Ld. DR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h as invoices, the Seaway Bill, insurance documents, bills of lading, and the affidavit provided by MGMIPL's Deputy Managing Director, it is evident that the title and risk of the goods were transferred to MGMIPL outside India, substantiating the offshore nature of the sales. Therefore, in light of the Hon'ble Panel's comprehensive review and conclusions, the undersigned acknowledges the offshore sales conducted by the assessee." 6. In view of the above facts, we are of the considered view that the contention of the assessee in Ground No. 4 and 4.1 of the appeal that in the present case, the assessee sold its goods to MGMIPL under offshore supply and the title, risk, and rewards related to the goods were transferred by the assessee outside India is acceptable. Ground No. 4 and 4.1 of the Appeal are allowed to that extent. Regarding the ground taken by the assessee in the above grounds about attributing profits on such goods sold by the assessee's company to MGMIPL under offshore supply, our decision is given later in this order. 7. Ground Nos. 5, 6 to 6.5 and 7 to 7.4 of the Appeal are against the action of the Assessing Officer in determining Permanent Establishm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e appellant company. (b) the expatriate employees of MGMIPL continued to obtain instructions from and report to the appellant and were under the control of the appellant: (C) the expatriate employees were working in capacity of the employees of the appellant company. Re: alleged Fixed place PE of the appellant in India 7. That on the facts and circumstances of the case and in law, the assessing officer/DRP erred in holding that the appellant has a factory or place of management in India in terms of Article 5(1) of the India-China DTAA. 7.1. That on the facts and circumstances of the case and in law, the assessing officer/DRP erred in holding that the manufacturing unit of MGMIPL constitutes a Fixed place PE of the appellant in India. 7.2 That on the facts and circumstances of the case and in law, the assessing officer/DRP erred in not appreciating the fact that MGMIPL is a separate legal entity incorporated under the Indian laws and alleging that MGMIPL is a mere representation and extension of the appellant in India. 7.3. That on the facts and circumstances of the case and in law, the assessing officer/DRP erred in not....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... man days, the same constitutes a service PE as per India-China DTAA. (i) Ld. AO has invoked Article 5(3)(a) of the IndiaChina DTAA which deals with supervisory PE (erroneously concluded as Service PE) in the draft order. (ii) Assessee has not submitted any response stating that assessee is engaged in supervisory activities for the quality of the product which makes the conclusion of establishing supervisory PE (erroneously mentioned as service PE by the Ld. AO) of the assessee by the Ld. AO factually incorrect. (iii) For ease of reference, the Article 5(3)(a) of the India-China DTAA is reproduced as under: "3. The term "permanent establishment likewise encompasses: (a) a building site or construction, installation or assembly project or supervisory activities in connection therewith, but only if such site, project or activities last more than 183 days." (iv) It is submitted that the assessee does not have any building site or construction, installation or assembly project in India. Its role is to supply products. Therefore, provisions of Article 5(3)(a) of India-China DTAA should not apply. Further, no employees of assessee have visited India for rendering any se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssion offered by the assessee and the relevant agreements. The Ld. DRP noted that AO in the DAO has held that the assessee through the 6 seconded employees (although alleged there were more) performed supervisory activities in connection with the manufacturing and assembling process of MG Cars by Indian AE by deputing its skilled manpower and duration of such activities was exceeding 183 man days, but mistakenly (typing error) held it to be constituting a Service PE as per the India China DTAA. 7.4. The Ld. DRP on careful examination of the rival submissions opined that the AO had correctly invoked the provisions of 5(3)(a) of the India China DTAA which deals with supervisory PE and assembly PE. The Ld. DRP noted that AO in the DAO had discussed in detail that the assessee was performing supervisory activities in connection with manufacturing and assembly of MG Cars by Indian AE in order to maintain its global image of brand and maintain the product quality. Further, the Ld. DRP noted that the evidences found during the search u/s 132 of the Act also showed that the seconded employees of assessee in India were managing and controlling the affairs of the Indian entity and indirec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he capacity of employees of the SAIC because not only did MGMIPL reimbursed the salary paid on cost to cost basis to the parent SAIC which was paying part of the salary in China, along with MGMIPL paying the Indian component of the salary to the seconded employees; but also the lien of the seconded employees continued in the parent SAIC. Further, the Ld. DRP noted that the circumstantial evidences also proved that the seconded employees were in full control of the parent SAIC and that the contractual agreement between the MGMIPL and the seconded employees was nothing but a facade to layer the control extended by the parent SAIC under the secondment agreement through which the control of the parent was exercised on MGMIPL. In view of these facts, the Ld. DRP upheld the action of the AO in holding that the assessee company had a supervisory PE in India. 7.9. Having held that however, the Ld. DRP also directed the AO to incorporate the above findings along with the findings of the search conducted by the investigation wing if any finding has been given in the search report in respect of the seconded employees engaged in the supervisory activity and pass a speaking order in this reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t for secondment of employees from South Korean group company to the Indian company along with the judicial precedents and OECD commentary, observed that where the seconded employees were solely working for the business of the Indian company and their remuneration was reimbursed by the Indian company to foreign company, it cannot be said that seconded employees were discharging functions or working for furtherance of the business of foreign company in India. The court further observed that the arrangement of secondment of employees by which the skilled and experienced personnel are deployed/seconded to group companies across the world is quite common in the global business scenario. The Court accordingly held that seconded employees working exclusively for the Indian company would not constitute a PE of the foreign company in India. The relevant observations of the Court are reproduced hereunder: "21. In Hyatt International, the Full Bench of our Court had explained that PE itself was a concept based upon an enterprise undertaking economic activity in a particular State irrespective of its residence. The taxability of business profits, we had explained, is itself dependent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess or the generation of income of the respondent in India, the decision of the Tribunal cannot be faulted." It is respectfully submitted that the facts of the appellant's case are identical to the case of Samsung Electronics (supra). A comparison of the factual position is tabulated below: Particulars Samsung's case Appellant's case Employees of the Foreign entity (Samsung Korea) seconded to the Indian Entity (Samsung India). Yes Yes The agreement between the Foreign and Indian entity gives complete control to the Indian entity in regard to the personnel seconded to the Indian entity. Yes Yes Seconded employees were engaged wholly and exclusively in the business of the Indian entity and have not been working in furtherance of business of the foreign entity. Yes Yes Remuneration/salaries of the seconded employees is borne by the Indian entity on which tax is duly deducted under section 192 of the Act. Yes Yes Place of business of Indian entity is not at the disposal of the foreign entity. Yes Yes Indian entity reimbursed the remuneration of seconded employees to the foreign entity on cost-tocost basis without chargin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....up a subsidiary at Halol, Gujarat for manufacturing its cars and selling them in India. To achieve this, the assessee entered into two types of agreements with MGMIPL viz. Technology License Agreement and KD (Knocked Down) Parts Supply Agreement, for granting of license to MGMIPL for production of the Licensed Products and for offshore supply of KD Parts to be used by MGMIPL for manufacture of motor vehicles and also the above six employees were sent by the assessee company on secondment to MGMIPL. 10.1 On perusal of the activities carried out by the above six employees as mentioned in the DAO/FAO and the various e-mails discovered during the course of search and seizure operations in the case of MGMIPL on 18.11.2022, it does not show that the assessee company was controlling the business of MGMIPL through the said six employees and it was carrying out its own business in India. Even though the Ld. DRP admitted that the six seconded employees were not directly engaged in any inspection activity per se, but they apparently possessed skills pertaining to managing the identification and evaluating potential suppliers, monitoring stock of inventory, support the resolution of enginee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....chased other goods from other than assessee company amounting to Rs. 5054.94 crores showing that substantial business activities were carried out by MGMIPL (sale of goods- Rs. 4899.17 crores during the year) and it was quite logical that trained and highly-skilled man power would be deputed by the assessee company to MGMIPL in the interest of its business because the business of supply of goods by the assessee company to MGMIPL would be directly related to the volume of business/ cars sold by M/s. MGMIPL. We also are of the view that the volume of business/ cars sold by M/s. MGMIPL would be more favourable to MGMIPL when it gets the best skilled man power to achieve the said targets. 10.3 The various e-mails as reproduced by the Assessing Officer on Pg. 28 to 43 of DAK has been carefully perused and it is seen that it relates to submission of reports by the seconded employees to the assessee company like "Overall Goals during the 14th Five Year Plan Period", relevant transportation cost being borne by the Indian Company i.e. MGMIPL in respect of its parent company, grille tooling cost will be 6,000,000 RMB vs Initial Cost being 3,500,000 RMB, various projects pertaining to SAIC ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... activities of MGMIPL and that there was no operational independence to MGMIPL. 10.5 Further, the finding of the Ld. DRP that the circumstantial evidences also proved that the seconded employees were in full control of the parent SAIC and that the contractual agreement between the MGMIPL and the seconded employees was nothing but a facade to layer the control extended by the parent SAIC under the secondment agreement through which the control of the parent was exercised on MGMIPL is not supported by any documentary evidence. The Ld. DRP has made these observations without pin pointing any specific material/ e-mail to support the above contentions. This fact is also acknowledged by the Ld. DRP in its concluding Para No. 7.2.8, wherein the Ld. DRP directed the Assessing Officer incorporate its findings along with the findings of the search conducted by the investigation wing if any finding has been given in the search report in respect of the seconded employees engaged in the supervisory activity and pass a speaking order in this regard. Thus apparently, the Ld. DRP was also not fully satisfied that evidences were there on record in respect of the seconded employees to establish t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s India Private Limited, a company organized and existing under the law of India and having its registered office at 1501-1503, 15th Floor, Tower-A, Signature Towers, Sector-25 Gurugram, Haryana-122001, (hereinafter referred to as "MGI"). 在您就职于名爵印度公司期间,本意向书明确了上海汽车集团(以下简称"公司")与您遵循的一 些规定,名爵印度公司是一家根据印度法律设立的印度公司(以下简称"名爵印度")。. [In English Translation] [This letter of intent outlines certain terms and conditions that Shanghai Automotive Industry Corporation (hereinafter referred to as the "Company") and you will adhere to during your employment with MG Motor India, an Indian company incorporated under the laws of India (hereinafter referred to as "MG India").] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompany, Further, during your employment with MGI, the Company shall not be responsible for any acts or omissions committed by you or assume any risk for the results produced from any work performed by you. 您为名爵印度提供的的工作服务仅代表个人,而不是代表公司。此外,在名爵印度就业期间, 公司不对您的任何行为或疏忽负责,也不对您从事工作的任何结果承担责任。 [In English Translation] [The services you provide to MG India are on an individual basis and not on behalf of the company. Furthermore, during your employment with MG India, the company is not responsible for any of your actions or omissions, nor is it liable for any results arising from the work you perform.] 3. You will function as a full-time employee of MGI and work under the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... salary, bonus and other entitlements including your social security incentives relating to your employment will be paid by MGI as per your employment agreement with MGI in the bank account maintained by you in India. However, from an administrative convenience perspective on your request, the company may pay a portion of your salary and other entitlements in the bank account maintained by you in China on behalf and under the request of MGI. 在您与名爵印度签订的雇佣合同中,工资、奖金和其他权益(包括与工作相关的社会保险费) 将由名爵印度承担,但是,出于便捷的考虑,在名爵印度的要求下,公司可以替名爵印度支付您 在中国境内的部分工资及社会保险费....
X X X X Extracts X X X X
X X X X Extracts X X X X
....34920;明您已阅读并理解意向书内容,并且进㇐步确认您 接受上述的条款和条件,如果您接受这些条款和条件,请在下面提供的空白处签名并将原件送 回至:上海市威海路489号。 [In English Translation] [By signing this Letter of Intent in the space provided below, you indicate that you have read and understood its contents and further confirm your acceptance of the terms and conditions stated above. If you accept these terms and conditions, please sign in the space provided below and return the original document to: 489 Weihai Road, Shanghai.] No.489, Weihai Road, Shanghai For SAIC MOTOR CORPORATION LIMITED " 10.8 The above terms and conditions which have not been contradicted by the Revenue clearly shows that the deployment of the said six seconded em....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aon to assemble the parts and convert into Final product. And charge 1% Royalty on the each Car sold by MGMIPL in India. Hence, MGMIPL is nothing but representation or extension of SAIC in India because without final assembling of parts sold by SAIC to MGMIPL has no value vis-à- vis no source of Income for the MG India P Ltd., as well as for SAIC. The SAIC sell parts, software, license and brand name to the MGMIPL And MGMIPL assemble all the hardware parts along with the software installation to make final consumable Car. Now the final car is sold in the market on which SAIC drive income. Hence it is very crystal clear that without assembling of cars neither MGMIPL drive/earn money nor SAIC. Therefore the assembly or manufacturing unit in India becomes important or crucial to complete the whole business transaction Manufacturing/Assembly unit of MGMIPL, #MG Motor, Halol, GIDC, Kanjari Part, Chandrapura, Gujarat & 10th Floor, 32nd Avenue, SainiKhera, Sector- 15, Gurgaon, add value to the parts sold by SAIC to MGMIPL and then sale it to the Indian Market for which SAIC take 1% Royalty on each Car sold. Therefore, the assembly unit of MGMIPL is nothing but a f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt defective parts though its employee at its own cost if defect is found. It means that designated personnel of the assessee company will have a permanent place in the office of MGMIPL, #MG Motor, Halol, GIDC, Kanjari Part, Chandrapura, Gujarat & 10th Floor, 32nd Avenue, Saini Khera, Sector-15, Gurgaon to fulfill his duties in India as described above because without which the contracts could not get competed. Designated personnel will have to be present with the MGMIPL for inspection to complete the supply contract. In view of the above facts, it is held that the assessee has Fixed Place PE in India under article 5(3)(a) & 5(2)(a) read with article 5(1) of the India and China tax treaty 5(2)(a) & (d). "The term permanent establishment "includes especially:- * a place of management, * a factory 5(3)(a) The term permanent establishment "includes especially- * As per the Article 5 (3)(a) of the India China Treaty "Permanent Establishment a building site or construction, installation or assembly project or supervisory activities in connection therewith, but only of such site, project or activities last more than 183 days * As per ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade by MGMIPL's own name (Sale of INR 4,899.17 Cr during the subject year) and GST on the same is paid on its own account. (v) Both MGMIPL and SMCL have other sources of income. (vi) The role of assessee is to supply goods from outside India and to provide license to MGMIPL. Thus, the allegation made by the Ld. AO that MGMIPL is carrying out assembly on behalf of the assessee is incorrect. (vii) Further, with regard to the allegation made by the Ld. AO that the goods are unpacked and inspected in presence of SMCL's designated personnel at the premises of MGMIPL, the Ld. AO has categorically ignored the affidavit filed by the Appellant which provides the following: [enclosed as Annexure 13 to the paperbook (page 319 of the paperbook)] "That even though the agreement provided the manner/procedure for inspection of KD Parts, SMCL does not have any employee or other personnel present in India during the Financial Year 2021-22 for the purpose of the inspection as specified in the agreement. Thus, no inspection has been done in India by any employee or other personnel of SMCL in India during the Financial Year 2021-22." (viii) Further for the sake of completeness, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... prove that assessee has a PE in India. The assessee places its reliance on: (xv) ADIT Vs. E-Funds IT Solutions Inc. [2017] 86 taxmann.com 240 (SC) (xiv) Supreme Court decision in case of Sofema SA order dated 26th August 2008 in Civil Appeal No.14694/2007 11.2. The Ld. DRP examined the findings of the AO, submissions of the assessee and the relevant agreements and observed that the determination of Fixed Place PE requires satisfaction of certain criteria which are discussed as under. i) The Supreme Court in the case of Formula One World Championship Ltd. vs. CIT: [2017] 394 ITR 80 has laid down certain principles for determination of fixed place PE: (a) entire business arrangement and various agreements have to be seen together in a wholesome manner and not in an isolated fashion to determine the dominant control (Para 67); (b) role of the foreign company and its affiliates in carrying out various activities in India have to be seen together (Para 73); (c) a PE must have three characteristics stability, productivity and dependence (Para 76); (d) the place of business of an agent who carries out a sales function on beh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e (fixed place of business) for the purpose of Paragraph 1 of the Article. The Ld. AR submitted that the fixed place of business need not be owned or leased by the foreign enterprise provided it was at the disposal of the enterprise in the sense of having some right to use the premises for the purposes of its business and not solely for the purposes of the project undertaken on behalf of the owner of the premises. The Ld. AR thereafter submitted that it should also satisfy the 'business activity test' and the core business of the foreign enterprise should be conducted through the place of business. The Ld. Counsel further submitted that mere existence of a step-down subsidiary in India does not constitute a PE in India. It was further submitted that the assessee sells KD parts to MGMIPL on principal-to-principal basis outside India and in India in as much all the risks and rewards attached with the KD parts are transferred to MGMIPL outside India. The Sr. Counsel further stated that the same was also evident from the insurance policy for the KD parts sold by the assessee wherein MGMIPL was named as insured. The Ld. AR submitted that In order that the foreign enterprise resident of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to point to a physical location at the disposal of the enterprise through which the business is carried on. It is also opined therein that the fixed place of business need not be owned or leased by the foreign enterprise provided it is at the disposal of the enterprise in the sense of having some right to use the premises for the purposes of its business and not solely for the purposes of the project undertaken on behalf of the owner of the premises. Further, Prof. Klaus Vogel in his treatise "Klaus Vogel on Double Tax Conventions" has explained that a "fixed place of business" should satisfy, amongst others, the "power of disposition" test to qualify as PE under Article 5(1). It is further submitted that the DTAAs characterize a fixed place of business as a PE only if the enterprise undertakes a business activity through the place of business. This is referred to as the 'business activity' test. However, an exception is carved out in Article 5(4)(e) in order to exclude the preparatory and auxiliary activities. The 'core business' of the foreign enterprise should be conducted through the place of business. Thus, there should be a nexus between the place of busin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of CIT vs. eFunds IT Solution and Ors: 399 ITR 34 wherein the assessee's namely e-Fund Corp. and e-fund IT Solutions Inc. were incorporated in USA. They entered into international transactions with their Indian subsidiary company, i.e. e-Fund India. In terms of agreement, e-Fund India performed back office operations in respect of ATM management, electronic payments, decision support and risk management services rendered by assessee's. The AO held that the assessee's constituted a fixed place PE in terms of Article 5 of the India US Tax Treaty since they had a fixed place in Delhi from where they carried on their own business. Consequently, the assessee's were liable to pay tax in respect of what they earned from the aforesaid fixed place PE in India. On the issues of fixed place PE, the Supreme Court relied on the decision of Formula One World Championship Ltd. vs. CIT (supra) and held that in order to ascertain as to whether an establishment has a fixed place of business or not is that such physically located premises have to be 'at the disposal' of the enterprise. However, merely giving access to such a place to the enterprise for the purposes of the project wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id ruling extensively dealt with the Apex court rulings in the case of Formula One World Championship and Morgan Stanley and the manual on OECD model tax convention and held that the essential factor for determining fixed place PE is the exclusive or significant 'control' or 'disposal' of the assessee over such fixed place. Unless the AO proves that the place is under significant control or at disposal of the assessee, the fixed place PE test shall not be satisfied. The Delhi High Court in the case of CIT vs. Nokia Network OY: 171 taxmann.com 757 relying upon the decision in case of Progress Rail Locomotive (supra) observed that where on facts Nokia Finland had only entered into contract of offshore supply of equipment to Nokia India, in such case, mere existence of a holding-subsidiary relationship between both the entities would not suffice for the existence of a fixed place PE of Nokia Finland in India. The Court further observed that the concept of PE is about the presence of a functional unit or carrying of entrepreneurial activity in a fiscal jurisdiction which gives rise to income or profits, unless the AO is able to prove that an economic center of a foreign entity....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection of goods by the appellant in India to ensure quality control of the products delivered to MGMIPL does not imply that there is any place earmarked for the appellant at MGMIPL's premises nor provides any mandate / authority to the appellant to avail for itself a fixed place of business at its constant disposal. No evidence has been brought on record by the AO to establish that a fixed place of business was made available to any employees at the premises of MGMIPL in India. Therefore, the appellant cannot be said to have a fixed place PE as envisaged under Article 5(1) read with Article 5(2) of the DTAA, in as much as the appellant does not have a fixed place of business in India through which its business is wholly or partly carried on." 13. The Ld. CIT(DR) submitted that under Article 5 of the India-China DTAA provides for "PE by way of assembly project" and in the case of the assessee, where the assessee opens the wrappers of the KD products and manufactures the cars through screw-driver technology at its assembly unit which was supervised by the six seconded employees through which the assessee was controlling the key functioning of the MGMIPL, and, therefore, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses to the appellant in India and similarly, no income is received or can be deemed to be received by it in India. The fact that the goods have been transferred to MGMIPL outside India has been accepted by the DRP and thus forms part of the assessment order. The appellant's case is squarely covered by the decision of the Supreme Court in the case of Ishikawajma Harima Industries (supra) and the decision in Voith's case is not applicable since the appellant is only engaged in supply/ sale of parts from outside India and it is not responsible for installation and erection of the said parts." 15. We have heard both the parties and perused the material on record. In this case, the assessee company supplied the goods in KD condition which is assembled/manufactured in India and sold to the Indian customers. This is an arrangement which generally speaking is followed by all the multinationals who set up their shop/subsidiary companies to sell their products in India. Again, generally speaking, these multinationals start manufacturing their products in India by procuring materials locally. Thus, it is an arrangement which is followed by a multinational to set-up its base in a c....