2017 (1) TMI 1679 - AT - Income Tax

Validity of reopening of assessment - assessee was making sales in India with the involvement of its Permanent Establishment (PE) in India and accordingly the profits attributable to such PE were chargeable to tax - whether no name of the assessee business transactions and the relevant year appear in the reasons ? - HELD THAT - As decided in GE ENERGY PARTS INC. VERSUS ADIT CIRCLE-1 (2) INTERNATIONAL TAXATION NEW DELHI. 2017 (2) TMI 780 - ITAT DELHI - i. Initiation of reassessment is valid. ii. Fixed place as well Agency Permanent establishment of all the GE overseas is established in India. iii. Attribution of income to the PE should be 2.6% of the sales made by GE overseaes entities in India. iv. Interest u/s 234B is not chargeable.

Summary

Issues involved:
1. Challenge to reassessment
2. Permanent establishment
3. Attribution of income
4. Interest u/s 234B

Analysis:

Challenge to reassessment:
The judgment involves 138 appeals by different but connected assesses of a group relating to the assessment years 2001-02 to 2008-09. The issue of reassessment was challenged in some appeals, and it was determined that the initiation of reassessment is valid.

Permanent establishment:
The appeals also dealt with the issue of permanent establishment. It was established that both fixed place and agency permanent establishments of all the overseas entities of the group are present in India.

Attribution of income:
Another key issue addressed in the judgment was the attribution of income. It was decided that income should be attributed to the permanent establishment at a rate of 2.6% of the sales made by the overseas entities in India.

Interest u/s 234B:
The final issue discussed in the judgment was regarding interest under section 234B. It was concluded that interest under this section is not chargeable in the present case.

The judgment was based on a lead case involving extensive arguments, and the decision taken in the lead case was applied to the remaining 138 appeals due to the similarity in issues. As a result, all the appeals were partly allowed based on the decisions made regarding reassessment validity, permanent establishment, income attribution, and interest chargeability.