TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 1738
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....es. Assessee has claimed that in India, GSL has appointed M/s NCR Corporation India Pvt. Ltd. (CIPL) as its non-exclusive distributor in exchange for payments for NCR's distribution activities. 3. The return was filed for the year under consideration declaring an income of Rs. 19,85,92,410/- which was offered to tax at a special rate of 10% claiming benefit of provisions of DTAA between India and Ireland. 4. During the year under consideration, the assessee company has earned revenue from CIPL in the form of Sale of Software, Export of Goods, Reimbursements and Royalty for use of technology and brand. Out of these transactions the assessee has offered to tax the Royalty for use of technology and brand received as 'Royalty'. 5. The case of the assessee was selected for scrutiny and relevant notices were issued. 6. The assessee was asked vide notice u/s 142(1) dated 29.09.2022 to furnish the details of Branch Offices/Project offices/Liaison office/Godowns, Warehouses and construction or other business sites in India and detail of agents in India. Also to give a note on why the above do not constitute a 'business connection' and a 'Permanent Establishment' in India? 7. ....
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....at their constant disposal certain premises or part thereof owned by another enterprise. It is further explained that the mere fact that the enterprise has certain amount of space at its disposal, which is used for business activities is sufficient to constitute a place of business. No formal right to use that place is therefore required. It also states that the words 'through which' must be given a wide meaning so as to apply to any situation where business activities are carried on at a particular location which is at the disposal of the enterprise for that purpose. Further in the case of the assessee in the agreement between parent and Indian company it is seen that in the Obligations of Distributor under Local Markets it is stated: Distributor hereby appoints NCR as its attorney in fact to execute all documents necessary to effect this assignment. This authorization shows that NCR India is acting on behalf of NCR Global in the local Market i.e. in India. 12. The assessee is a foreign company incorporated in Ireland and is a tax resident of Ireland in accordance of Article 4 of the Double Taxation Avoidance Agreement between India and Ireland (Tax Treaty' or 'DT....
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....of the business income is considered attributable to the PE in India. Since the profit margin has been adopted, all other expenses in the books of the assessee incurred for the purposes of business have been given credit for. Computation of income of PE Particulars Amount End user license fee for software product Rs. 40,92,65,172/- Export of goods Rs. 40,21,31,498/- Gross revenue Rs. 81,13,96,670/- Profit @35% Rs. 28,39,88,835/- Profit attributable to PE in India taxable as Business income (70% of Business Income). Rs. 19,87,92,185/- 12. The assessee is in appeal raising the following grounds:- "Based on the facts and circumstances of the case and in law, NCR Global Solutions Limited ("NCR GSL1' or "the Company" or "the Appellant") respectfully craves leave to. prefer an appeal under Section 253(1)(d) of the Income-tax Act, 1961 ("the Act"), against final assessment order dated 20 September 2023 ("impugned order") issued under Section 143(3) read with Section 144C(13) of the Act passed by Ld, Deputy Commissioner of Income-tax, Circle-2(2)(2), International Tax, New Delhi ("AO") in pursuance of the Directions dated 09 August 2023 issue....
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....ude contracts on behalf of the Appellant and NCR India habitually secures orders in India, mainly or wholly for the Appellant and is executing sales to India purchasers/parties for and on behalf of the Appellant are totally baseless and incorrect. 5.2. Impugned order failed in not appreciating that Appellant merely sells goods and software to NCR India bn principal to principal basis and that NCR India is engaged in manufacturing of ATMs for its own business, and alleging existence of PE. 6. Non-speaking impugned order totally failed to discharge burden of proof to establish existence of PE of any form in India. 6.1. DRP directions pursuant to which impugned order is passed erred in law, by not following binding order passed by the Tribunal for AY 2018-19 and AY 2019-20 on identical facts and issues; 6.2. Impugned order misinterprets Distribution agreement and reaches at perverse conclusion on existence of Agency PE and Fixed place PE by placing selective reliance on clause 6.1(a) and 6.1(b) ignoring all relevant facts and material on record. 7. Without prejudice to the above grounds of appeal, impugned order erred, in law and on facts, ....
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....e appeal in accordance with law." 13. Heard and perused the ground. The ld. counsel for the assessee, Shri Nageshwar Rao, has primarily relied the objections which were filed before the DRP as the foundation of the arguments in support of the grounds. It was submitted that the DRP has failed to take into consideration that the AO has not given any reasoning and justification to establish the existence of the PE. It was submitted that the AO has failed to establish the stability, productivity and dependence of the assessee on NCR India to constitute fixed place PE of the assessee in India. It was submitted that NCR India was its non-exclusive distributor and none of the employees of the assessee has ever visited India. Thus, there was no place of business and no permanent location of the assessee in India. The ld. counsel submitted that adjustments are made on the basis of pre-conceptions and notions without appreciating that the assessee is engaged in development of software and manufacturing of information technology related hardware products which is different from the manufacturing activities carried out by NCR India. The ld. counsel submitted that NCR India is into manufactu....
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.... the sale, lease or service of Hardware and license or service of Software by NCR within the Territory." 17. As we go through the obligations and distributorship covenants described in section 6 of the agreements, we find that for the local markets these two parties had agreed as follows:- "b. Local Markets. Distributor shall make such changes to any Hardware and Software that NCR deems appropriate to adapt such Hardware and Software for use in the Territory. Distributor shall be responsible for translating NCR materials into the languages of the Territory and shall be responsible for making such changes to the Hardware and Software, manuals, and promotional materials as are required to comply with the laws of the Territory. Distributor hereby assigns to NCR all of its rights in such Hardware and Software and documentation adaptations including but not limited to, all local language translations of NCR materials, advertising and promotional materials, and in related patents and copyrights. Distributor hereby appoints NCR as its attorney in fact to execute all documents necessary to effect this assignment." 18. Further, with regard to the business operations, it was a....