2021 (9) TMI 1109 - HC - Income Tax

Income accrued in India - income attributable to the assessee PE in India - business connection in India under Section 9(1)(i) - Article 5(1) 5(2) of DTAA between India and Indonesia - HELD THAT - As decided in PT LP DISPLAY INDONESIA 2021 (9) TMI 1050 - DELHI HIGH COURT also covers the case of the present Respondent-assessee wherein the CIT(A) in the 201 proceedings held that none of the AEs, apart from LG Korea, had PE in India. Given that the same issue arises in the present proceeding, no substantial question of law arises in the present appeal. Accordingly, the appeal alongwith application being bereft of merit is dismissed.

Summary

Issues:
Challenge to ITAT order dismissing Revenue's appeal for Assessment Year 2005-06; Interpretation of Sections 9(1)(i) and 5(2) of Income Tax Act, 1961; Assessment of income attributable to a Permanent Establishment (PE) in India; Validity of reassessment proceedings under Section 147; Impact of Supreme Court judgments on similar cases.

Analysis:
1. The appeal challenges the ITAT order dismissing the Revenue's appeal for Assessment Year 2005-06. The appellant questions the ITAT's decision to quash assessment proceedings without recognizing the business connection in India under Section 9(1)(i) and the existence of a PE under the DTAA between India and Indonesia.
2. The appellant further contests the ITAT's ruling that no income is attributable to the assessee's PE in India. The appellant argues that income of a non-resident received in India is taxable, emphasizing Section 9(1) which deems income to arise in India through a business connection.
3. The Court notes a similar case involving a sister concern of the assessee and LG Group of Companies where the ITAT's decision was upheld, emphasizing the requirement of a reasonable belief for reopening assessments under Section 147 without hindsight.
4. The Court highlights the Supreme Court's rulings in cases related to foreign AEs, where it was determined that no PE existed in India, rendering reassessment proceedings invalid. This precedent influenced the dismissal of the present appeal, as it aligned with the findings in previous cases.
5. The Court rejects the Revenue's contention regarding the existence of a PE in India for the respondent-assessee, especially after the CIT(A) found no PE for other AEs. The Court deems the appeal infructuous post the Supreme Court's judgment, emphasizing the duty to dispose of such litigation in the interest of justice.
6. Ultimately, the Court concludes that no substantial questions of law are raised in the appeal, leading to its dismissal due to lack of merit. The judgment is uploaded online and shared with the counsels via email for reference and compliance.