2026 (4) TMI 1687

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....fers from legal defects such as, but not limited to, being passed in violation of principles of natural justice, is devoid of merits, based on conjectures, surmises and a pre-judged mind without appreciating the Appellant's submissions, contrary to the facts on record and the provisions of the Act, and hence, is bad in law and is liable to be quashed as such 2. Validity of the Impugned Order 2.1 The Impugned order dated January 28, 2025, is void-ab-initio, invalid, without jurisdiction and bad in law on account of being barred by the period of limitation prescribed under Section 153 of the Act the limitation prescribed under the Act and is liable to quashed as such. 3. Attribution of profits to the Indian Operations 3.1 The Ld. AO and the Ld. DRP ("Lower Authorities") erroneously applied Section 9(1)(i) of the Act without appreciating that the Appellant did not undertake any part of its operations in India. 3.2 The Lower Authorities erred in not following the binding position of law laid down by the Hon'ble Supreme Court in the case of Morgan Stanley Co. Inc. [292 ITR 416), that no further profits could be attributed to the Perma....

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....ed in levying an aggregate amount of INR 281,934 towards interest and fee payable under Sections 234A, 234B, 234C, 234D and 234F of the Act, in determining the sum payable by the Appellant pursuant to the Impugned Order, in the computation sheet annexed thereto. 4.2 The Ld. AO erred in short-grant of TDS credit amounting to INR 105,162 in determining the taxes payable by the Appellant pursuant to the Impugned Order, in the computation sheet annexed thereto. 4.3 The Ld. AO erred in considering that a refund of INR 77.743 has already been issued to the Appellant, in determining the taxes payable by the Appellant pursuant to the Impugned Order, in the computation sheet annexed thereto. The Appellant craves leave to add, alter, modify, amend, substitute, withdraw and/or re-instate all or any of the Grounds of Appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing, to enable the Hon'ble Tribunal to decide the above grounds according to the law. 2. Brief facts of the case are that assessee is engaged in the business of providing technology and service related of internet adv....

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....t be any further attribution to the profit to its PE of assessee as the transaction between assessee and its AE is at arm's length price. To support such view, the assessee relied upon the decision of Hon'ble Apex Court in DIT vs Morgan Stanley & Co. 292 ITR 416 (SC), wherein it was held that no further profit can be attributed to the PE in India since the agent has already been remunerated with an arm's length consideration. The assessee also stated that transaction of assessee and the PE of assessee is an international transaction under the provision of Indian Income Tax Act and arm's length price needs to be determined as per Indian Transfer Pricing Regulation as prescribed in section 92 to 92F. The assessee also submitted that under the provisions of DTAA between India and UK, the profit attributable to PE is determined in accordance with Article 7 of the treaty. The assessee submitted that appropriate procedure for attribution of profits, is when the same is computed by TPO by adopting transfer pricing regulation under the Act. In case, the AO wishes to attribute profit to PE of assessee, in such situation a reference to TPO under section 92CA ought to be made for determining ....

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....ofit and loss account. Further, the global profit and gain have not been computed in accordance with provision of Indian Income Tax Act; hence the AO has no other option except for allocation profit attributable to the Indian operation by resorting the provision of Rule 10 of Income Tax Rules. The ld. DRP passed the direction on 24.12.2024. On receipt of direction of DRP, the ld. AO passed final assessment order on 28.01.2025. Aggrieved by the additions in the assessment order, the assessee has filed present appeal before Tribunal. 4. We have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue. The ld. AR of the assessee that assessee is engaged in the business of providing technology and services related to internet advertising. The assessee purchases media space from overseas suppliers and provides to Indian customer. The assessee appointed its subsidiary in India to provide marketing and related services to assessee. The assessee is a non-resident and maintained its financial statement in its source country that is UK. The financial statements were provided to lower....

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....ubmission of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on various documentary evidences filed by the assessee on record. We have also deliberated on various case laws relied by ld. AR of the assessee. We find that there is no much dispute on fact. There is no dispute that during the assessment, the assessee has furnished its transfer pricing its study report to show the transaction with its AE ar arm's length. Admittedly, arm's length price has not been examined or doubted by the assessing officer. We find that in a series of decision, the various bench of Tribunal held that where the assessee has a dependent agency, permanent establishment and its Indian agent had been paid / remunerated at arm's length price, nothing further could be taxed in the hands of assessee. We also find that Hon'ble Apex Court in Honda Motors Co. Ltd. vs ADIT (supra) while quashing the notice under section 147 held that where notice to the assessee for reassessment was based only on the allegation that it had permanent establishment in India, said notice could not be sustained once arm's length price procedure has been followed. We also find....