TaxTMI 
TaxTMI 
2026 (7) TMI 546
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....st the returned income of INR 9,97,55,986 and computing tax liability of INR 27,52,52,310 as against refund of INR 2,20,68,840 claimed by the Appellant in the return of income ('ROI'). Assessment order time barred 2. On the facts and in the circumstances of the case and in law, the impugned assessment order dated 26 August 2025 is without jurisdiction, illegal and bad in law in as much as it is barred by limitation having being passed beyond the time limit prescribed under the Act. Not followed decision of the Hon'ble ITAT in Appellant's own case 3. On the facts and in the circumstances of the case and in law, the Hon'ble DRP/Ld. AO has erred in not following the decision of the Hon'ble ITAT in Audi AG's own case wherein the issue of Fixed Place Permanent Establishment ('Fixed Place PE') and Dependent Agent Permanent Establishment ('DAPE') was comprehensively verified, discussed, and decided in favour of Appellant. Erroneous conclusion of Dependent Agent Permanent Establishment in India 4. On the facts and in the circumstances of the case and in law, the Hon'ble DRP/Ld. AO has erre....
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....against INR 61,00,88,151 in the computation sheet annexed to the final assessment order. Erroneous levy of interest under section 234B of the Act 11. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in levying interest under section 234B amounting to INR 6,14,07,094 (however added INR 6,35,03,630 to the total interest and fee payable head), which is consequential in nature. Penalty proceedings are bad in law 12. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under section 270A of the Act on the premise that there is under-reporting of income by the Appellant, without appreciating the fact that the additions made by the Ld. AO is not in accordance with the law." 3. Facts of the case, in brief, are that the assessee filed its return of income for AY 2023-24 on 22.11.2023 declaring total income at Rs. 9,97,55,986/- and claimed refund of Rs. 2,20,68,840/-. Audi AG is a German automobile manufacturer that designs, engineers, produces, markets, and distributes premium automobiles. The company is engaged in developing vehicles and components for th....
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....sales support, which are integral to revenue generation. SAVWIPL is the Permanent Establishment and place of business for the applicant in India. (ii) SAVWIPL functions as a dependent agent and an extended arm of Audi AG, lacking autonomy over critical business decisions. (iii) Audi AG exercises substantial control over SAVWIPL, making it indistinguishable from Audi AG's own operations. (iv) The Attribution of profits is to be made as per Rule 10 of the Income Tax Act, 1961. (v) Factual distinction is prayed from the earlier Orders of the Hon'ble Income Tax Appellate Tribunal. Accordingly, the income derived from SAVWIPL's operations, including sales and services, is taxable in India. The Panel upholds the attribution of appropriate profits to the PE, taking into account the functions, assets, and risks borne by SAVWIPL in India. The objection of the Applicant does not succeed. The action of the Ld. Assessing Officer is upheld. 6.2 We are of the considered view that the facts of earlier year AY 2022-23 are similar to the facts of the year under consideration. Therefore, consistent with the view taken by the ....
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....ssessment year 2009-10 and 2010-11, the matter was heard at length. We however see no reasons to take any view of the matter then the view taken by the coordinate bench in the aforesaid decision wherein the coordinate bench has inter alia observed follows:- 13. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have also gone through the other material consisting of various paper books and the various case laws relied by learned representative of the parties. We have also gone through the contents of the Importer agreement between the assessee and its AE. The assessee is tax resident of Germany and India had entered in tax treaty with Germany. And as per the provisions of section 90 (2) the assessee is entitled to invoke the provision of Income Act or the India Germany DTAA, which is more beneficial to them. A non-resident entity will be liable to tax in India if the activities under taken by them constitute its business connection which constitute permanent establishment. The question is whether the non-resident has business connection in India from or through which income profit or gain can be said to be accru....
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.... the assessee. The ld DRP also relied on the decision of Aramex International Logistic Pvt Ltd. (supra). 16. The foremost us, and primary controversy before whether VW group sales constitute assessee's PE in India or not. The assessee is tax resident of Germany. Article 5 of India Germany text treaty defined fixed place of PE. As per article 5 of Indo Germany text treaty, fixed place arises when the foreign entity has a fixed place in India through which its business is wholly or partly carried on. 17. During the submission the learned AR of the assessee has pointed out that similar facts were considered by In PE and with Mumbai Tribunal in case of Daimler AG (supra). Daimler AG (supra) it has been held that the subsidiary of that company cannot be regarded as respect to carrying or business in India as a parts and completely knocked down (CKD) sales Ltd on are made by the (DCIL) to Daimler Chrysler principle to principle basis and on sale such parts /CKD India become property of DCIL, which does not constitute sales outlet or warehouse of the assessee has, that assessee does not carry out any operation in India in respect of sales of part of CKD to DCIL and t....
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....L no income accrues to the Assessee on the basis of any activities carried out, on behalf of the Assessee in India. Therefore in our opinion DCIL does not constitute the Assessee's business connection in India and thus the Assessee's income from sale of raw material/CKD units to DCIL would not be liable to tax in India under the provisions of the Act. We therefore, concur with the decision of the CIT (A) on this issue and dismiss the ground No. 1(i) of the Revenue's appeal," 7. The above observation in the context of sale of raw materials/CKD Units sale equally apply to sale of CBU Cars also. The finding of the CIT (A) is that on a perusal of the General Agency Agreement between the assessee and MBIL it was clear that delivery of goods took place outside India and the payment was also being made for purchase of goods outside India. Therefore, there was no business activity carried out by the assessee regarding sale of CBU Cars directly to the customers in India. Thus the assessee does not have a business connection and that MBIL does not constitute a business connection with the assessee in India under section 9 of the Act, therefore, income in respect....
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....nstitute a dependent agent of the Assessee. The prices offered to the Indian clients arc as per list price notified and SO whether DCIL is involved or not the No price charged to the customer would be the same. profits can be attributed to the services of DCTL in India. In fact by engaging the services of DCIL, the profit of the Assessee is reduced to the extent of he commission paid to DCIL. 31. The following decisions cited by the assessee can be extracted for this purpose. "The decision of the Hon'ble supreme Court in case of DIT v. Morgan Stanley & Co Inc 292 ITR 416 (refer page 555, 556 & 565 of Paper Book Volume II), wherein the Hon'ble Apex Court has observed that since the assessee did not conclude any contracts on behalf of Morgan Stanley & Co. Inc (MSCo), it did not have an agency PE in India. Similar view has also been taken by the Special Bench of Delhi Tribunal in case of Motorola Inc & Others v. DIT (2005) 95 ITD 269 (refer page nos. 580, 589 & 591 of Paper Book Volume II) and the Authority for Advance Rulings in case of TVVM Ltd. v. CIT (1999) 237 ITR 230 (Refer page 600 & 618 of Paper Book Volume II). The Hon'ble Delhi Tribunal....
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....n from one to another. Therefore, we are not. convinced that the department had established that the activity of DCIL, even if it is to be considered as PE has resulted in any profits to the Assessee and in view of the specific provisions of the Article 7 of the Double Taxation Avoidance Agreement between Indian and Germany no part of the profit of the non-resident. Assessee can be attributed to the activity with DCIL and hence is not taxable in India. 33. As we have held that no profit accruing to the Assessee on sale of CBU cars directly to Indian customers can be attributed to the activities of OCIL, we are not deciding upon the correctness or otherwise of the percentage of profits, estimated by the CIT(A), as attributable to the activities of PE in India. Hence Ground No. 3 raised by the assessee is not decided as being infructuous." 9. As can be seen from the order of the Tribunal on identical facts, MBIL does not constitute PE of the assessee in India. Respectfully following the decision of the Tribunal referred to above we hold that income on sale of CBU Cars by the assessee in India does not give rise to a business connection in India and income on such sa....
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....mstance to determine the taxability of such an income and for this proposition they have referred the judgment of Hon'ble Andhra Pradesh High Court in the case of Skoda Export v. Addl. CIT [1983] 143 ITR 452/[1984] 17 Taxman 256. Finally in paragraph 17 as incorporated above, Hon'ble High Court has categorically said that the taxable event took place outside India with the passing of the property from seller to buyer and acceptance test is not the determinative of this factor and further referring to the judgment of Hon'ble Supreme Court in the case of Mahabir Commercial Co. Ltd. v. CIT [1972] 86 ITR 417 (SC), held that overall agreement does not result the income accruing in India and the execution of an overall agreement is promoted by purely commercial considerations as India Cellular Operator would be desirous of having a single entity that could liaise with. Thus, it was concluded that the place of negotiation, the place of signing of agreement or formula acceptance thereof or overall responsibility of the assessee are relevant circumstances. Since the transaction is relating to the sale of goods, the relevant factor and determinative factor would be as to where th....
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....swagon Group Sales on principle to principle basis and thereafter, Volkswagon Group Sales it on a principle to principle basis to the dealers. 21. We are also in agreement with the submissions of the ld. AR for the assessee that the facts of the decision in Daimler Chrysler AG (supra) are similar to some extent with the assessee in the present case. In the said case the assessee the assessee is also in the business of manufacturing and selling of premium vehicles worldwide (Mercedes) and tax resident of Germany. The assessee (Audi AG) is also tax resident of Germany. The comparative chart of the case in hand and that of Daimler Chrysler AG relied by ld AR for the assessee is refereed below: -------- 22. We have noted that in case of Daimler AG (supra), despite the fact that the AE was performing more activities as narrated in the chart above, it was held that the associated entity not created either fixed place PE nor dependent agent. Further, the income arising on the sales of Car by Volkswagen Group Sales to dealers in India is income accruing or arising in India and is taxed separately in the hands of Volkswagen Group Sales. In our view merely acting f....