2023 (1) TMI 1244 - HC - Income Tax

Income taxable in India - PE in India - whether Liaison Office of the assessee did not constitute a Permanent Establishment liable to tax in India when the said office was clearly a fixed place and the activities carried out could not be said to be preparatory or auxiliary in nature? - income as liable to be attributed in India - Dependent Agency Permanent Establishment (DAPE) of the assessee in India? - HELD THAT - Questions covered by the judgment of the coordinate bench passed in case of Mitsui Company Ltd. 2022 (11) TMI 1346 - DELHI HIGH COURT as held held that the Liaison office of the assessee did not constitute a Permanent Establishment (for short PE ). - No substantial questions of law arise for consideration.

Summary

Issues:
1. Taxability of amount received for offshore supplies under Section 44BBB
2. Determination of Liaison Office as Permanent Establishment (PE)
3. Assessment of income attributed to India for Dependent Agency Permanent Establishment (DAPE)
4. Taxation basis for income from Teesta and Purulia Projects

Analysis:
1. The appeal pertains to AY 2009-2010 challenging the ITAT's order regarding the taxability of offshore supplies under Section 44BBB. The appellant questions the ITAT's decision on whether the amount received for offshore supplies in Teesta and Purulia projects is taxable under Section 44BBB. This issue revolves around the interpretation of tax provisions and the applicability of tax on specific transactions.

2. The second issue concerns the classification of the Liaison Office as a Permanent Establishment (PE) for tax purposes in India. The appellant challenges the ITAT's ruling that the Liaison Office does not constitute a PE despite being a fixed place with activities beyond preparatory or auxiliary nature. This issue involves analyzing the nature of the Liaison Office's activities and its legal implications under tax laws.

3. The third issue relates to the determination of income attributable to India for a Dependent Agency Permanent Establishment (DAPE). The appellant contests the ITAT's decision that no income is liable to be attributed in India as the liaison office does not qualify as a DAPE. This issue requires a detailed examination of the criteria for establishing a DAPE and its tax implications.

4. Lastly, the appellant challenges the ITAT's decision to tax the income from Teesta and Purulia Projects on a cash basis instead of a Mercantile basis. This issue involves the method of accounting for income and the impact on the tax liability of the assessee. The judgment of a coordinate bench in a related case is cited to support the decision on the remaining questions raised in the appeal.

In conclusion, the court dismissed the appeal as no substantial questions of law were found to arise for consideration, closing the case based on the issues discussed and the applicability of relevant legal precedents.