INCOME TAX ACT, 1961

Section 90 9(1)(v)(i)

Double Tax Avoidance Agreement - Business profits - Permanent establishment - Profit attributable from CRS

AO held that assessee had earned a profit of Rs.1,452,550,424 or Euro 2,50,90,000 from India. The ratio of attribution was to be worked out by considering the importance and range of functions of AIPL especially in the new agreement dated 1-10-2004. Further, it was held that the number of assets of the assessee was growing in India and new facts relating to presence of assets in India have also been found out. Holding thus, the AO worked out the profit attributable to India @ 75% of the total profit. The AO held that the Profit attributable to Indian Permanent Establishments was Rs.1,08,94,12,818 taxable at the rate of 40% plus surcharge and education cess, i.e., 41.82%. DRP confirmed the order of the AO. This issue had been adjudicated over a period of time for various years and the decision of the Tribunal had been affirmed by the jurisdictional High Court. The Co-ordinate Bench of the Tribunal for the assessment years 1996-97 to 1998-99, after considering the extent of activities in India and abroad, the assets employed and risks assumed, held 15% of the revenues relating to the bookings made from India as attributable to the assessee's PE in India. The Delhi High Court following its decision in the case of DIT v. Galileo International (2009) 224 CTR 251 (Del) : 009 TaxPub(DT) 1488 (Del) had affirmed the orders of the Tribunal passed for assessment years 1996-97 to 2006-07. No more than 15% of the revenues generated from India could be attributed to the alleged PE of the assessee in India. The aforesaid order passed by CIT(A) for assessment year 2005-06 had been confirmed by the ITAT, vide Order, dated 29-10-2010 and the High Court vide Order, dated 31-5-2011 [Revenue appeal] and dated 13-8-2013 [Assessee's appeal]. Held: Since, the facts remained unaltered and since payment to the agent was already @ 33%, no further addition was warranted in the case of the assessee.

Followed:Assessee's own cse ITA Nos. 191, 192, 193/2011 and DIT v. Galileo International Inc. (2009) 224 CTR 251 (Del-HC) : 2009 TaxPub(DT) 1488 (Del-HC).

REFERRED :

FAVOUR : Against the assessee (Partly).

A.Y. : 2007-08 to 2012-13

INCOME TAX ACT, 1961

Section 9(1)(vii)

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