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TMI Blog2015 (10) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the aforesaid document, because it changes the entire colour of the conclusion drawn by the AO. The AO will also examine the fact, whether the commission is on sale of Varian products only or not. The quantum of commission is a question of fact and cannot be imputed or presumed. In case of reimbursement of expenses from Varian Germany also, the matter is set-aside for examining, whether the commission is on gross sales or on the net of sales of the equipments directly procured by the associate enterprises. If the arrangement with this AE is also the same, then the same conclusion should be drawn in this case also. - Decided in favour of assessee for statistical purpose. Addition on account of attribution of profits by treating the assessee branch as permanent establishment of various VGCs - Held that:- This issue, whether the assessee is a PE of various Varian group of companies or not, has been discussed in detail by the Tribunal in assessee’s own case for the assessment years 2002-03 to 2006-07 [2013 (11) TMI 195 - ITAT MUMBAI]. After detail analysis, the Tribunal has finally held that, the Indian branch of the VIPL is not dependent agent of VGCs and therefore, it does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales made by Varian Italy to its Indian customers are liable to be taxed in India. The Appellant prays that the AO be directed accordingly. 4. On the facts and in the circumstances of the case and in law, the Learned AO erred in concluding that an amount of ₹ 1O,80,117, being 10% of the gross sales made by Varian Italy to its customers in India, be taxed in the hands of the Appellant as profits attributable to the PE of Varian Italy, as per Rule 10 of the Income-tax Rules, 1962. The Appellant prays that the AO be directed accordingly. 5. On the facts and in the circumstances of the case and in law! the Learned AO erred in disregarding the Appellant s submission that without prejudice to the above, even if the Appellant is considered to be PE of Varian Italy, the Appellant has been compensated on an arm s length basis (as per the transfer pricing report prepared by independent professional consultants) for the activities/functions carried out by the Appellant / risks assumed, and as such there should not be any further attribution of income/profits. The Appellant prays that the AO be directed accordingly. Ground No. 3-Levy of interest under section 234B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculation of commission income or not. In response, the assessee submitted the details showing item wise reimbursement and in the narration given therein, it was mentioned that the reimbursement of expenses are on account of purchase of additional materials/equipments in India for the main instrument. It was further clarified as under:- The assessee submitts that the reimbursement of expenses is a pure reimbursement of expenses incurred by the assessee on behalf of the Varian Group Entities ( VCGs ). The assessee debited its financial accounts with the expenses incurred on behalf of VGCs. Subsequently, on receipt of the credit note from VGCs, the assessee credited it under the head Other Income in its financial accounts. Your goodself will appreciate that since the same is in the nature of pure reimbursement, the same is not included for the purposes of calculation of commission . 5. The Assessing Officer did not accept the assessee s contention on the ground that contract which has been entered into with the principal companies and the customer in India, include the entire pacakage i.e., it is not only the main equipment but also all additional equipments which may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Schedule A which has been referred in agreement, is appearing at page 31 of the paper book, which provides that the assessee shall be entitled to commision of sales value, net of freight, insurance and other charges. There is no such Schedule A which has been referred by the ld. Counsel. In order to prove her point she also reffered to page 28 of the paperbook which is an agreement and in that agreement there is reference to Schedule A which is attached at page 31 of the paperbook; Thus, she submitted that the commission payble has to be considered on the sales value and there is no such stipulation that local or ancillary equipment is not part of sales. Therefore, the Assessing Officer has rightly calculated commission payble on the reimbursement of cost on local eqipments by the assessee for executing the sale contract. 9. In rejoinder the ld. Counsel submitted that the Schedule A given at page 25 and page 38 are very much part of the Distribution Representation Agreement only which was there before the authorities below. Further, the commission cannot be calculated on the presumption when the agreement itself provides that the local equipments procured would be rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter back to the file of AO, to adjudicate this issue afresh in light of the aforesaid document, because it changes the entire colour of the conclusion drawn by the AO. The AO will also examine the fact, whether the commission is on sale of Varian products only or not. The quantum of commission is a question of fact and cannot be imputed or presumed. In case of reimbursement of expenses from Varian Germany also, the matter is set-aside for examining, whether the commission is on gross sales or on the net of sales of the equipments directly procured by the associate enterprises. If the arrangement with this AE is also the same, then the same conclusion should be drawn in this case also. In the result, ground no.1 is treated as allowed for statistical purpose. 12. In ground no.2 the assessee has challenged the addition of ₹ 10,80,117/- on account of attribution of profits by treating the assessee branch as permanent establishment of various VGCs. It has been admitted for both the parties that the similar issue has come up for consideration before the Tribunal, in assessee s own case right from the A.Y. 2002-03 to A.Y. 2006-07, wherein, the Tribunal has held that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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