9911796707
TMI Blog2014 (7) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... connected with the other in any of the ways referred to in the provisions of Evidence Act relating to the relevancy of facts - The fact in issue u/s 3 of the Evidence Act means and includes any fact from which either by itself or in connection with other facts the existence/ non-existence nature or extent of any right, liability or possibility asserted or denied in any suit or proceedings necessarily follows. Establishment of PE - Whether there is PE or not (which is primarily a factual finding to be recorded by Tribunal after due appreciation of facts on record) – Held that:- In course of survey while recording the statement of Chief Finance Officer Shri Chandan Jain a specific question was put to him to provide the names of employees of GEIPL who were working in the other GE group entities in India for which he answered that he will check and revert back - it cannot be said that AO had not made inquiries regarding the employees of GEIPL who were working for other GE entities - The assessee did not provide this information. Inordinate Delay In Filing Evidence – Held that:- The assessee cannot be permitted to first scuttle the investigations/ inquiries by not furnishing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder-sheet noting was recorded on 20-2-2014: 20-2-14: Ld. DR had filed an application for admission of additional documents on 19-2-14. Ld. Counsel sought time to file a reply by 20-2-14 viz. today. Ld. Counsel files a reply objecting to admission of additional documents. After detailed hearing and after considering the department's stand, ld. Counsel requested for filing a detailed reply against admission of additional documents. Accordingly, the appeals are adjourned to 25-3-14. 2.1. Thereafter from 25-3-2014 the appeal got adjourned from time to time as per the order-sheet notings and finally from 27-5-2014 again the hearing of the appeal commenced but the arguments on the admission of additional evidence were deferred to 2-6-2014 as ld. Sr. counsel was not available. 2.2. From 2-6-2014 to 4-6-2014, arguments on admission of additional evidence were advanced by both the parties and written submissions were exchanged and, thereafter, it was agreed by both the parties that the issue regarding admissibility of additional evidence be first decided before hearing the appeal any further. Accordingly, we accede to the request of both the parties to firstly decide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fit case, and depending on the circumstances, it would be open to the Tribunal to admit additional evidence when it is produced in Court and an oral application is made. I do not think that there is any hard and fast rule in this behalf and it should be left to the discretion of the Bench. I am unable to say that the ld. Accountant Member exercised such discretion improperly. Rule 29 permits the Tribunal to admit the additional evidence for any substantial cause. Apparently, the ld. Accountant Member ahs admitted the additional evidence on this ground with which I am unable to disagree. The intention behind the Rule is that substantial justice should be done and the interest of justice should be the overriding consideration. Having this in mind I hold that there is no error in the ld. Accountant Member admitting the additional evidence and sending it to the CIT for examination and decision. (emphasis supplied by us) 2.4. In view of above discussion, we do not find any merit in the preliminary objection raised by the ld. Sr. counsel for the assessee. Accordingly the same is rejected. 3. In the petition for admission of additional evidence it is submitted on behalf of departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of survey. After detailed analysis of documents found during the course of survey, it was observed that for A.Y. 2002-03 to 2006-07 these expats and their team had at their disposal a fixed place of business in the form of office premises at AIFACS, 1, Rafi Marg, New Delhi. From these survey documents it was revealed that the activities of the non-resident GE group entities being conducted from the fixed place of business referred to above were not of the preparatory or auxiliary character but constituted the PE as provided in paragraph 2 of Article 5 of respective tax treaties. 4.4. Ld. CIT(DR) further pointed out that this conclusion was arrived at on the basis of analysis of various documents found during the course of survey in the form of agreements/ purchase orders/ copies of contracts which proved the active involvement of the employees of Indian company and expats in the conclusion of contract on behalf of such non-resident GE Group entities. Therefore, it was concluded that GEIPL also constituted the agent, other than an agent of independent status, of the non-resident GE Group entities. This resulted into the creation of the dependent agent PE as per the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi. 4.8. The assessee partly responded to these summons/ notices dated 2-3- 2007 and 7-3-2007 vide its letter dated 16-3-2007 and 9-4-2007. In the letter dated 16-3-2007 the assessee, inter alia, stated in para 1.2 as under: Kindly note that our client does not have access to employment letters of all employees of GE overseas group companies working in India. However, as requested in your letter dated March 7,2007, our client has procured and enclosed copies of assignment letters (at Annexure 3) for the following employees of GE International Inc. US (GEII ): Dan Nalawade Riccardo Pracacci William Blair Ashfaq Nainar Kenneth Pierson Sameer Aggarwal Prat Kumar 4.9. With reference to these summons/ notices and reply thereto, ld. CIT(DR) submitted that assessing officer was not provided full information of employees which formed part of specific sales team that provided services to specific business group (energy/ oil and gas/aviation/ infrastructure etc.) or specific entity during all the years under appeal. 4.10. Ld. CIT(DR) further submitted that assessee had filed objections to the reasons recorded but did not object to the AO's observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les services to overseas entities must also be provided. He submitted that if the assessee provides these informations then revenue will not press for admission of additional evidence. However, in absence of any information on these counts, the revenue has filed additional evidence I the form of 10 Linkedin profile to rebut the fresh unsubstantiated claims made by the assessee. 4.15. Ld. CIT(DR) in his written submissions dated 5-6-2014, placed on record, has further submitted in paras 2.3 2.4 as under: As the information on expats was not filed, the AO vide letter dated 14.11.2008 (Paragraph 11 of the assessment order (page 44)) again asked the assessee to submit, The details of expatriates looking after the business of the assessee in India, who were present in India during various years? Please provide name, designation, name of employer, duration of stay, copy of secondment / employment /assignment letter. The details of the office, which was being used for . providing the services. In the reply dated 16.12.2008, the assessee stated that, It is humbly submitted that we are in the process of collection of the data in relation to the expatriates who were associated wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the overseas entity in its transfer pricing documentation other than GEIOC. 4.16. With reference to above specific information, called for by the assessing officer, ld. CIT(DR) submitted that for proper adjudication of the issue it is necessary that the entire information regarding employees be available before the ITAT. 4.17. Ld. CIT(DR) further submitted that Linkedin profile contains information on person's education, details of employment, a summary of person's job profile/ experience etc. 4.18. Ld. CIT(DR) pointed out that these informations are necessary to dislodge the assessee's claim that such employees are worth nothing and they act as a communication channel only and perform very limited functions as mentioned in the agreement between GEIIPL and GEIOC. He pointed out that these Linkedin profile establish that these individuals are very highly qualified, they have international experience, they have worked at high positions in the GE in India and outside India and they were responsible for sale of GE products in India. He submitted that the Linkedin profile also shows with which they were working. This is factual information and the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing cases - WP(C) 1280/2012 dated 7-3-2012 Seema Sapra Vs. General Electric Co. ors. - OMP 647 of 2012 and IA no. 13193 of 2012 dated 5-11-2012 - GE India Industrial Pvt. Ltd. Vs. Deema Sapra - OMP 647 of 2012 and IA no. 13193 of 2012 dated 17-10-2012 - GE Industrial Pvt. Ltd. Vs. Deema Sapra - WP(C) 1280/2012 dated 9-5-2012 Seema Sapra Vs. General Electric Co. ors. - WP(C) 1280/2012 dated 14-5-2012 Seema Sapra Vs. General Electric Co. ors. 5.3. With reference to these decisions, ld. Sr. counsel pointed out that the so called whistleblower has had the strongest possible stricture and adverse comments made against her by several Judges and Benches of the Hon'ble Delhi High Court. Ld. Sr. counsel further submitted that in any case the whistleblower writ petition was filed in 2012 and was available on the internet shortly after it was filed. Therefore, revenue has to explain why this material was not placed on record earlier. 5.4. Ld. Sr. counsel referred to Rule 29 and pointed out that the same is analogous to Order 41 Rule 27 of the CPC which reads as under: Rule 29 of the IT AT Rules, as would be observed, is analogous to Order 41 Rule 27 of the Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l scrutiny, (b) The additional evidence was not available to the party seeking to adduce the said evidence despite the exercise of due diligence, and (c) The evidence is relevant and necessary for determination of the issue(s) in dispute. 5.7. Ld. Sr. counsel further submitted that Linkedin is a social networking website, which has been operational since May 2003. It is only in the nature hearsay and cannot be adduced as evidence as held by Hon'ble Supreme Court in the case of Quamarul Islam Vs. S.K. Kanta AIR 1994 SC 1733 and Laxmi Raj Shetty v. State of Tamilnadu (1988) 3 SCC 319. He further referred to the decision of United States Court of Appeals in the case of Automotive Support Group LLC v. Dale Hightower and the United States District Court of California in the case of VB Conversions LLC v. Now Solutions Inc. 5.8. Ld. Counsel further submitted that there is inordinate delay in production of the additional evidence and, therefore, the same cannot be adduced at this stage. He further pointed out that assessment order was passed on 30-12-2008 which was upheld by ld. CIT(A) vide order dated 30-9-2010 in entirety. Thereafter the appeal was preferred before the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncil in Parsotim v. Lal Mohar, the rule is not intended to allow a litigant who has been unsuccessful in the lower courts to patch up the weak parts of his case and fill up omissions in the court of appeal. 5.10. Ld. Sr. counsel also relied on the order of ITAT in the case of Honda Trading Corp. India Pvt. Ltd. Vs. ACIT ( ITA no. 5297/Del/2011, to which one of us (ld. JM) was a party, wherein it was observed as under: 10. After careful consideration of the facts and circumstances of the case, we observe that the only reason given by the assessee is that it was a foreign database which was costly to obtain and, therefore, the assessee could not furnish the same at the earlier stage. The counsel for the assessee has not disputed the fact that additional evidence submitted by the assessee was available in public domain at the time of proceedings conducted before the authorities below. In view of above, we are inclined to hold that the assessee was not prevented by sufficient cause from bringing additional evidence on record earlier before TPO, DRP and Assessing Officer. If at every stage of proceedings, the assessee conducts a fresh search and finds new comparables to levera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities are business development and market assessment for their respective business as mentioned in page no 27 in Annexure F. The business looked at are: 1. Dan Nalawade - Equipment services 2. Riccardo Procecci - Oil and Gas eqUipment 3. William Blair - Aviation 4. Ash Narar - Transportation 5. Kenneth Piesson - Sly Transportation 6. Sameer Aggarwal- We will let you know 7. PratKenn -Fewer Infrastructure Q. 35. Whether for any business of the GE. Group entity not wholly conducted through subsidiaries in India i.e. in the field of Oil and Gas, Aviation. Transportation are being sub- contracted or getting it done through any third party. Ans. I am not aware of this but I can get back to you. Q. 36. Who IS the Principle officer of G.E industrial India (P) limited? Ans. There IS no Principle Officer for G.E industrial India (P) limited. Q. 37. Please provide the names of employees of G.E Industrial India Private Limited, who are working for the other G.E group entities business in India. Ans. I have to check and I will revert. Q. 38. Who is looking after the business of Aircraft - Engine leasing business of G.E grou p in India? Ans. Nalin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. It is not open to the assessee to urge fresh objections before the Court which the Assessing officer had no occasion to deal with, unless of course, the notice to reopen is ex-facie without jurisdiction not requiring consideration of any argument such as beyond limitation. In view of the above, we find substance in the submissions on behalf of the revenue that the Assessing officer had tangible material to come to prima facie view that income chargeable to tax has escaped assessment. 6.2. Ld. CIT(DR) further submitted that it is the claim of the ld. Sr. counsel that only 12 employees are presently serving in the GE and therefore at least it could have found the EMS of these 12 employees. 6.3. Ld. CIT(DR) submitted that there is no ground to go to employees to file affidavits in regard to their linkedin profile, because if assessee wants to controvert the statements and profile then it can simply file the employment and EMS for the years they had worked in GE and are relevant to the year under appeal. Regarding the submission of ld. Sr. counsel that in the linkedin profiles employees exaggerate their achievement, ld. CIT(DR) submitted that a person will not write a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no basis as far as the information on the education, employment history and job profile of the person is concerned. These have been employees of GE and, therefore, GE can only prove that any information is false. 6.8. As regards the submissions of ld. Sr. Counsel of there being inordinate delay in producing the evidence, ld. CIT(DR) pointed out that this information was searched on the internet in the month of February 2014 and was not available with the Revenue prior to that time. Ld. CIT(DR) submitted that the assessee did not object to various facts before the assessing officer or the CIT(A) and has been objecting for the first time before the Tribunal. Further he did not file the TP orders for A.Y. 2004-05 to 2008-09 before the lower authorities and the claim based on these orders are being made for the first time before the Tribunal. 6.9. As regards the two US cases relied upon by ld. Sr. counsel, ld. CIT(DR) submitted that the evidence of Linkedin profile referred in two US cases was discussed in different context and has nothing to do with the use of facts available in the Linkedin profile in the present case. 6.10. Ld. CIT(DR) further submitted that no fresh opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson, including any officer of a banking company and examining him on oath; (c) compelling the production of books of account and other documents; and (d) issuing commissions. 7.3. Thus, the powers of Tribunal in dealing with appeals are expressed in the widest possible terms and Tribunal has wide powers including the powers of compelling the production of books of a/cs and other documents. 7.4. Rule 29 of the ITAT Rules reads as under: 29. Production of additional evidence before the Tribunal- The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case 'without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. 7.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional evidence is relevant to the fact in issue, which is existence or not of PE, then in order to advance the cause of justice, the additional evidence should be admitted. In order to enable the Tribunal to decide disputes before it in a lawful, fair and judicious manner, it necessarily is required to look into and consider such and other material having a direct nexus and bearing on the subject matter of the appeal. 7.12. We will consider various objections of assessee. A. NO ENQUIRIES MADE BY AO IN REGARD TO EMPLOYEES OF GEIPL WHO WER WORKING FOR OTHER GE ENTITIES:- 7.13. Admittedly, in the reasons recorded by assessing officer it was categorically stated, as noted earlier, that the information regarding the employees of GE in India prior to the present expats was not given by GE group. However, assessing officer had recorded a finding that there had been the persons working for such sales through out the period 1-4-2000 to till date. This factual finding recorded by assessing officer was not objected to by the assessee while filing objections before assessing officer. At this stage it would be relevant to examine the assessee's contention that no such informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se inference on account of non-furnishing of information by assessee and when assessee is trying to take milage out of its conduct, the department is bringing on record additional evidence in the form of linkdin profile of employees to demonstrate that the conclusion drawn by department was fully justified. All the cases relied by assessee or referred to by ld. CIT(DR) are with reference to additional evidence brought before the Tribunal for the first time by assessee. But none of the cases deals with a situation where assessee withholds some information from the department and then claims that information relevant to the facts in issue should not be admitted. There is no quarrel with the ld. Sr. counsel's submissions that reasons recorded cannot be improved upon by department by production of fresh material. For deciding whether the reopening is in accordance with law or not, only prima facie belief of the assessing officer regarding escapement of income is to be examined and no conclusive proof of the evidence has to be there for upholding the validity of reasons recorded. However, for arriving at final finding of fact the fresh material can be considered Where in order to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see will be free to rebut the information contained in linkedin profiles by bringing on record contrary facts to dislodge the claims made in linkedin profiles. C. LINKEDIN PROFILES IS HEARSAY EVIDENCE:- 7.21. Ld. Sr. Counsel has submitted that Linkedin profiles is an hearsay evidence and has no probative value. In this regard ld. Sr. counsel has relied on two decisions of US courts. The said decisions have been rendered entirely on different factual considerations. In the case of Automotive Support (supra), the issue was regarding breach of contract. As far as the decision in the case of VB Conversions LLC (supra) is concerned, there also the dispute was in regard to fraudulent code to hack into software on multiple occasions. Thus, in both the cases dispute related to particular employees. Therefore those decisions are not relevant for the present controversy. 7.22. Ld. Sr. counsel has submitted that Linkedin profiles is self appraisal of employees and, therefore, it is hearsay evidence. We are unable to accept this contention. Linkedin profiles is not in the nature of hearsay because it is the employee who himself has given all the relevant details and the same relate to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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