2024 (1) TMI 1405 - AT - Income Tax

Existence or otherwise of a Permanent Establishment (PE) of the assessee in India - HELD THAT - As relying on assessee own case 2023 (10) TMI 967 - ITAT DELHI we hold that the assessee did not have any PE in India in the assessment years under dispute. Hence, no profit can be attributed to such PE. Consequently, the Assessing Officer is directed to delete the addition in both assessment years. Appeals of the assessee are allowed.

Summary

Issues: Existence of Permanent Establishment (PE) in India

Analysis:
The judgment involves appeals by the assessee against final assessment orders related to Assessment Years 2016-17 and 2020-21, focusing on the existence of a Permanent Establishment (PE) in India. The Tribunal considered the submissions and material on record, acknowledging that the assessee's case aligns with previous decisions of the Tribunal concerning the existence of a PE. The Tribunal reviewed orders from the Coordinate Bench related to similar disputes involving the assessee and another group entity.

The Tribunal examined the facts and materials on record to determine whether the assessee had a PE in India during the assessment years in question. The assessee argued that due to significant changes in circumstances, including the vacation of the AIFACS building previously considered a PE, and no expatriates visiting India, there was no PE in India during the relevant assessment years. Despite the assessee's detailed submissions and evidence, the departmental authorities relied on past decisions without adequately considering the specific facts of the current assessment years.

The Tribunal emphasized the need to assess the existence of a PE on a year-to-year basis, as per the relevant tax treaty definitions. It highlighted that past existence of a PE does not automatically imply its presence in subsequent years without considering the current facts. The Tribunal cited relevant precedents to support the requirement for the Revenue to establish the existence of a PE and criticized the authorities for not properly examining the evidence provided by the assessee. The Tribunal concluded that the departmental authorities failed to address the specific facts and evidence presented by the assessee, leading to the decision that the assessee did not have a PE in India during the assessment years in question.

Based on the consistent factual position and in line with previous decisions, the Tribunal ruled in favor of the assessee, directing the Assessing Officer to delete the addition in both assessment years. The appeals of the assessee were allowed, and the judgment was pronounced in the open court on 17/01/2024.