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TMI Blog2018 (3) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... g by the ITAT has not been shown to be perverse. The Court further notes that there was no basis for the AO to conclude that the Special Bench of the ITAT had erred in its conclusion in favour of the Assessee that the LOs were not carrying on any activity which was either incidental and auxiliary in nature. With the consistent position in this regard continuing since 1977-78, in the absence of any evidence to suggest a change in the circumstances, there was no warrant for the AO and the CIT (A) to take a different view of the matter. - Decided in favour of assessee. - ITA 902/2009 - - - Dated:- 12-10-2017 - JUSTICE S. MURALIDHAR JUSTICE PRATHIBA M. SINGH For the Appellant : Mr. Asheesh Jain, Sr.Standing Counsel. For the Respondent: Mr. Mayank Nagi, Advocate. O R D E R 1. This is an appeal by the Revenue against an order dated 8th February 2008 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 1806/Del/2005 for the Assessment Year ( AY ) 2001-02. Questions of law 2. While admitting this appeal by the order dated 7th September 2009, the following questions were framed by the Court for consideration:- a) Whether the ITAT was right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO noted that the Special Bench of the ITAT had, by its judgment dated 11th October 1991 in the Revenue s appeals for AYs 1980-81 and 1981-82, held that LOs were only supplying information and, therefore, could not constitute a PE in India. The Special Bench overruled the decision of the ITAT for AYs 1978-79, 1979-80 which held to the contrary. 7. In the present assessment order, the AO highlighted what, according to him, were aspects which escaped the attention of the Special Bench of the ITAT which pronounced the aforementioned order. The AO concluded as under: 1.4 (...) The activities of the head office and all other offices of the Assessee are more or less similar in nature. All of them locate and negotiate with vendors or customers as the case may be and effect the supply of goods or services. It may also be pointed out the Assessee apart from its affiliates or subsidiary, maintain as many as 89 such offices all over the world. Therefore it can be seen that the offices in India are undertaking more or less same or similar activities as that of its head office or other offices that constitute the principal and core activity of the Assessee. Signing of contract by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal by concurring with the AO that the LOs of the Assessee in India constituted PEs. The CIT (A) referred to the following materials to arrive at a conclusion that the Assessee was carrying on activities in its LOs which were not merely preparatory or auxiliary in nature:- (i) Business report for the month of February 2003 ((placed at pages 53 to 61 of the Paper Book of the Revenue). (ii) E-mail dated 07.11.2002 sent by Mr. Aswani Bhagwan from Bombay office to Mr. Haga, Head of machinery Division of on textile business (placed at pages 51 to 52 of the Paper Book of the Revenue). (iii) Report of the meeting on 01.04.04 with M/ s Tata Tele Services Ltd. (placed at pages 48 to 50 of the Paper Book of the Revenue). (iv) Copy of MOU Between Balmer Lawrie Co. Ltd. and Yanmar Co. Ltd. for supply of cool container (placed at pages 27 to 33 of the Paper Book of the Revenue). (v) Copy of successor report submitted by an employee of LO to three expatriates of New Delhi LO along with a MOU ((placed at pages 93 to 110 of the Paper Book of the Revenue). (vi) Statement of Mr. Yuki Morata, Director and, Chief Financial Officer recorded on date of survey on 25.01.2005 (placed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LO at Bombay to Mr. Haga, Head of Machinery Division, of the LO relating to textile business. It was dated 7th November 2002 and, therefore, did not relate to the AY in question. However, it only suggested passing information from one person to another at the LO in Bombay in respect of the cotton yarn for various customers in Philippines. The said e-mail could not be read to conclude that the contract was either negotiated or concluded in India by the LO. (c) The document at (iii) above was a report of the meeting between Tata Teleservices Limited and the Assessee. It was a normal practice of the LO to receive delegations from abroad and arrange meetings. The said document also did not suggest that the employees were concluding contracts in India on behalf of the HO. (d) The document at (iv) above was a Memorandum of Understanding ( MOU ) signed by the representative of the LO wherein the name of the LO was appearing as a witness. The MOU was between Balmer Lawrie Co. Limited and Yanmar Co. Limited and it was unsigned and undated. It did not establish that the LO was party in any trading or commercial activities. (e) The document at (v) above was an MOU between Yanmar D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case as no application had been made for leading additional evidence. It was accordingly concluded that such evidence collected by the AO by undertaking a survey after completion of the assessment could not be considered in the appellate proceedings in the absence of an order of the CIT (A) under Section 250 (4) of the Act. Analysis and reasons 18. Mr. Asheesh Jain, the learned Senior Standing Counsel for the Revenue, has placed before the Court the remand report dated 31st January 2005 prepared by the AO for submission to the CIT (A) in the course of the appellate proceedings. The Court has also been taken through the statement recorded by Mr. Yuki Morata and the answers given by him to specific queries. The Court is unable to be persuaded that the ITAT erred in its conclusion that the evidence produced by the AO does not show that the LOs of the Assessee carried on any activity which was not incidental and auxiliary in nature. 19. It is urged by Mr. Jain that the ITAT had merely gone by the fact that the Reserve Bank of India ( RBI ) had not found the Assessee to be in violation of any of the conditions subject to which it was permitted to operate its LOs in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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