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TMI Blog2019 (9) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... 'the Act'). Grounds of appeal of various years are reproduced hereunder to appreciate that the issues are common. 2. The assessee has raised the following grounds of appeal in ITA No. 4559/Del/2018 for the Assessment Year 2004-05:- "1. That on the facts and in the circumstances of the case and in law, the orders passed by the Assessing Officer (AO)/Dispute Resolution Panel (DRP) to the extent prejudicial to the interest of the appellant, are bad in law and void ab- initio. 2. That the AO/DRP erred in upholding the validity of the reassessment proceedings under Section 147 of the Act when initiation of proceedings did not satisfy necessary requisites contained in Section 147 of the Act and there being no reason to believe that any income chargeable to tax had escaped assessment. 2.1 That the AO/DRP erred in upholding the validity of the reassessment proceedings under Section 147 of the Act even though all the transaction between LGIL and Assessee were held to be at arm's length by the Ld. Transfer Pricing Officer ('TPO') and thus there could not be any 'escapement of income' 2.2 That the AO/DRP has erred in initiating reassessment proceedings against the Appellant solely o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nction was already captured in the Transfer Pricing Assessment of the Indian subsidiary and hence there arose no occasion to allocate any further profits to such PE. 6. Without prejudice to the above grounds, in absence of a PE of the Appellant in India, or any activity carried out in India the AO/DRP grossly erred in attributing profits to India. 7. That on the facts and in the circumstances of the case, the orders passed by the Assessing Officer (AO) /Dispute Resolution Panel (DRP) are perverse and is based on surmises and conjectures. 8. That the AO/DRP has grossly erred in law and facts in directing the levy of interest under sections 234B and 234C of the Act without appreciating that the Appellant is a non-resident and tax is deductible from the income of the Appellant. 9. That the AO/DRP has grossly erred in law and facts in levying interest under section 234A of the Act. 10. That the AO/DRP has grossly erred in law and facts in directing the levy of interest under section 234D of the Act without appreciating that no refund was granted to the Appellant. 11. That the AO/DRP has grossly erred in law and facts in initiating the penalty under section 271 (1) (c) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3 That the AO/DRP completely failed to appreciate that in terms of Article 5(7) of the Double Tax Avoidance Agreement between India and Korea ('DTAA') control of holding company over subsidiary does not in itself create a Permanent Establishment of the non-resident. 3.4 That the AO/DRP erred in law in selectively relying on the statement of expatriate employees and failed to appreciate the true intention of the statements which evidenced that the expatriates were working only for LGIL in India. 4. That the AO/ DRP has erred in not appreciating the fact that in terms of Article 10 of the DTAA, shifting of any profits arising to a non-resident is prohibited if the transactions between the two enterprises have met the arm's length test. In the present case all the transactions between the Appellant and LGIL have been subjected to transfer pricing proceedings and have been found to be at arm's length. 5. Without prejudice to the above grounds, the AO/DRP erred in bringing to tax the salary cost of expatriate employees of LGIL to the Appellant in absence of the PE of the Appellant in India and hence no income of Appellant could be brought to tax in India. 6. That without prejud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Assessee were held to be at arm's length by the Ld. Transfer Pricing Officer ('TPO') and thus there could not be any 'escapement of income' 2.2 That the AO/DRP has erred in initiating reassessment proceedings against the Appellant solely on the basis of statements of expatriate employees of LGIL recorded at the time of survey which were not even relevant for the assessment year under consideration. 2.3 That the AO/DRP has erred in sustaining the initiation of reassessment proceedings under section 147 of the Act in the absence of any live link or nexus between the 'information' and the formation of the belief that income chargeable to tax had escaped assessment. Without prejudice 3. That the AO/DRP erred in concluding that the Appellant had a Permanent Establishment ("PE") under Article 5 of the India - Korea DTAA given the fact that necessary requisites of creating a PE under Article 5 of DTAA were absent in the present case. 3.1 That the AO/DRP erred in making assessment on the assumption that their existed a PE of the Appellant in India solely relying on the statements of expatriate employees of LG Electronics India Private Ltd. (hereinafter referred to as "LGIL") ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in initiating the penalty under section 271(1)(c) of the Act and alleging that the Appellant has concealed the true and correct particulars of its taxable income and furnished inaccurate particulars of its income." 5. The assessee has raised the following grounds of appeal in ITA No. 1946/Del/2017 for the Assessment Year 2007-08:- "1. That on the facts and in the circumstances of the case and in law, the orders passed by the Assessing Officer (AO) /Dispute Resolution Panel (DRP) to the extent prejudicial to the interest of the appellant are bad in law and void ab- initio. On Reassessment 2 That the AO erred in initiating reassessment proceedings and the DRP erred in confirming the same without the satisfaction of the necessary requisites for taking such action in terms of Section 147 of the Act. 2.1 That the AO/ DRP erred in not appreciating that for initiating reassessment proceedings there has to be a valid "reason to believe" that any income chargeable to tax has escaped assessment. 2.2 That without prejudice at best the formation of belief by the Assessing Officer is a borrowed belief relying on the survey findings without any independent application of mind. 2.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f expatriate employees of LG Electronics India Private Ltd. ( hereinafter referred to as "LGIL") which were inadmissible evidence in terms of the settled position of law. 3.7 That the AO/DRP erred in coming to the conclusion that expatriate employees working in LGIL were working on behalf of the Appellant, ignoring the fact that the expatriate employees were employees of LGIL working under direct supervision and control of LGIL. 3.8 That without prejudice, the conclusions of the AO / DRP are patently erroneous given that all the transactions between the two companies were uninfluenced by their relationship, and had met the Arm's Length Price test in terms of Transfer Pricing Assessments made on both the companies. 3.9 That without prejudice the AO / DRP also erred in ignoring the provision of Article 10 of the DTAA which neutralizes the tax position in respect of the non-resident assessee, once the transactions between the two related parties has met the Arm's Length Price. 4. That without prejudice the AO / DRP also miserably failed to appreciate that the functions which are allegedly performed by the expatriates in the PE was the import of raw material and parts which fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP erred in confirming the same without the satisfaction of the necessary requisites for taking such action in terms of Section 147 of the Act. 2.1 That the AO / DRP erred in not appreciating that for initiating reassessment proceedings there has to be a valid "reason to believe" that any income chargeable to tax has escaped assessment. 2.2 That without prejudice at best the formation of belief by the Assessing Officer is a borrowed belief relying on the survey findings without any independent application of mind. 2.3 That without prejudice even the approval granted by the Commissioner for initiating such proceedings suffers from the same deficiency reflecting complete non application of mind. 2.4 That the AO further erred in initiating the reassessment proceedings while relying on the statements of the expatriate employees of the Indian subsidiary when such statements in the absence of any material were not admissible in law to form any such belief. 2.5 That the AO/DRP has erred in initiating reassessment proceedings against the Appellant solely on the basis of statements of expatriate employees of LGIL recorded at the time of survey conducted in 2010 which were not eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Transfer Pricing Assessments made on both the companies. 3.9 That without prejudice the AO / DRP also erred in ignoring the provision of Article 10 of the DTAA which neutralizes the tax position in respect of the non-resident assessee, once the transactions between the two related parties has met the Arm's Length Price. 4. That without prejudice the AO / DRP also miserably failed to appreciate that the function to have been allegedly performed by the expatriates in the PE was the import of raw material and parts which function was already captured in the Transfer Pricing Assessment of the Indian subsidiary and hence there arose no occasion to allocate any further profits to such PE. 5. That without prejudice the AO/ DRP has erred on facts and in law, in relying on the Foreign Collaboration Agreement entered between the appellant and LGIL (which was approved by the Department of Industrial Policy and Promotion, Government of India) to allege a PE for the appellant in India. On Attribution 6. Without prejudice to the above grounds, in absence of a PE of the Appellant in India, or any activity' carried out in India the AO/DRP grossly erred in attributing profits to I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act in the absence of any live link or nexus between the 'information' and the formation of the belief that income chargeable to tax had escaped assessment. Without prejudice 3. That the AO/DRP erred in concluding that the Appellant had a Permanent Establishment ("PE") under Article 5 of the India - Korea DTAA given the fact that necessary requisites of creating a PE under Article 5 of DTAA were absent in the present case. 3.1 That the AO/DRP erred in making assessment on the assumption that their existed a PE of the Appellant in India solely relying on the statements of expatriate employees of LG Electronics India Private Ltd. (hereinafter referred to as "LGIL") which were inadmissible evidence in terms of the judgment of the Hon'ble Supreme Court in S. Qadar Khan & Sons (254 CTR 228) 3.2 That the AO/DRP erred in not appreciating the fact that the expatriate employees of LGIL were working for and furthering the business of LGIL and not that of the Appellant. 3.3 That the AO/DRP completely failed to appreciate that in terms of Article 5(7) of the Double Tax Avoidance Agreement between India and Korea('DTAA') control of holding company over subsidiary does not in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and furnished inaccurate particulars of its income." 8. The assessee has raised the following grounds of appeal in ITA No. 5021/Del/2018 for the Assessment Year 2010-11:- "1. That on the facts and in the circumstances of the case and in law, the orders passed by the Assessing Officer (AO)/Dispute Resolution Panel (DRP) to the extent prejudicial to the interest of the appellant, are bad in law and void ab- initio. 2. That the AO/DRP erred in upholding the validity of the reassessment proceedings under Section 147 of the Act when initiation of proceedings did not satisfy necessary requisites contained in Section 147 of the Act and there being no reason to believe that any income chargeable to tax had escaped assessment. 2.1 That the AO/DRP erred in upholding the validity of the reassessment proceedings under Section 147 of the Act even though all the transaction between LGIL and Assessee were held to be at arm's length by the Ld. Transfer Pricing Officer ('TPO') and thus there could not be any 'escapement of income' 2.2 That the AO/DRP has erred in initiating reassessment proceedings against the Appellant solely on the basis of statements of expatriate employees of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian Subsidiary and hence there arose no occasion to allocate any further profits to such PE. 6. That the AO/ DRP miserably failed to appreciate that the case of the Appellant is now completely covered by the Judgment of the Hon'ble Supreme Court in Civil Appeal No. 2833 of 2018 titled "Honda Motor Company Ltd., Japan Vs. Asst. Director of Income Tax" dated 14th March 2018. 7. Without prejudice to the above grounds, in absence of a PE of the Appellant in India, or any activity carried out in India the AO/DRP grossly erred in attributing profits to India. 8. That on the facts and in the circumstances of the case, the orders passed by the Assessing Officer (AO) /Dispute Resolution Panel (DRP) are perverse and is based on surmises and conjectures. 9. That the AO/DRP has grossly erred in law and facts in directing the levy of interest under sections 234A, 234B and 234C of the Act without appreciating that the Appellant is a non-resident and tax is deductible from the income of the Appellant. 10. That the AO/DRP has grossly erred in law and facts in directing the levy of interest under section 234D of the Act without appreciating that no refund was granted to the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were working on behalf of the Appellant, ignoring the fact that the expatriate employees were employees of LGIL working under direct supervision and control of LGIL. 2.8 That the case of the Appellant is squarely covered by the order of this Hon'ble Tribunal in Samsung Electronics Co. Ltd. Vs. DCIT [2018] 92 taxmann.com 171 (Delhi - Trib.). 2.9 That without prejudice the conclusions of the AO / DRP are patently erroneous given that all transactions between the two companies were uninfluenced by their relationship and had met the Arm's Length Price test in terms of Transfer Pricing Assessments made on both the companies. 2.10 That without prejudice the AO / DRP also erred in ignoring the provision of Article 10 of the DTAA which neutralizes the tax position in respect of the non-resident assessee, once the transactions between the two related parties has met the Arm's Length Price. 2.11 That the issue of existence of permanent establishment has become academic in view of the law laid down by the Hon'ble Supreme Court in Honda Motor Company Japan vide its order dated 14.03.2018 in Civil Appeal No.(s). 2833 of 2018. 2.12 That without prejudice the AO / DRP also miserabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Permanent Establishment 2. That the AO / DRP grossly erred in law in coming to the conclusion that the Indian subsidiary of the Appellant constituted a fixed place of business under Article 5(1) of the DTAA between India and Korea, given the fact that necessary requisites of creating a PE under Article 5 of DTAA were lacking in the present case. 2.1 That the AO / DRP grossly erred in law in allowing themselves to be influenced for the conclusion relating to existence of a PE merely on account of the alleged control of the Appellant over the Indian subsidiary. 2.2 That the AO / DRP completely failed to take note of Article 5(7) of the DTAA which prohibits the conclusion of a PE merely because of control of one company over and another. 2.3 That the AO/ DRP erred in placing relying on, selectively, the statements of the expatriate employees of the Indian subsidiary to demonstrate control of the Appellant over the Indian subsidiary. 2.4 That the AO/DRP erred in making assessment on the assumption that their existed a PE of the Appellant in India solely relying on the statements of expatriate employees of LG Electronics India Private Ltd. (hereinafter referred to as "LGIL" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial Policy and Promotion, Government of India) to allege a PE for the appellant in India. 6. Without prejudice to the above grounds, in absence of a PE of the Appellant in India, or any activity carried out in India the AO/DRP grossly erred in attributing profits to India. 7. That on the facts and in the circumstances of the case, the orders passed by the Assessing Officer (AO) /Dispute Resolution Panel (DRP) are perverse and is based on surmises and conjectures. 8. That the AO/DRP has grossly erred in law and facts in directing the levy of interest under sections 234A, 234B and 234C of the Act without appreciating that the Appellant is a non-resident and tax is deductible from the income of the Appellant. 9. That the AO/DRP has grossly erred in law and facts in initiating the penalty under section 271 (1)(c) of the Act and alleging that the Appellant has concealed the true and correct particulars of its taxable income and furnished inaccurate particulars of its income." 11. The first assessment order out of the aforementioned batch of appeals was passed for AY 2007-08 and therefore the said assessment year is taken as the lead case. Both the parties agreed that lead asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on 18.10.2011 13. On 24/06/2010, survey was conducted at the premises of the LG India under section 133A of the Act. During the course of survey, statement of the expat employees of LG India was recorded by the department. Based on it Appellant was issued notice under section 148 of the Act on 24.03.2014. Pursuant to the said notice, Appellant filed return for the subject AY on 02.05.2014 declaring income of INR 156,97,45,016. The Appellant also requested for copy of reasons recorded for initiating the reassessment proceedings which were provided vide letter dated 21.11.2014. In the reasons recorded for initiating reassessment proceedings, it was observed that on the basis of statements of key officials recorded and materials impounded during the course of survey conducted under section 133A of the Act in premises of LG India on 24.06.2010, the AO had reasons to believe that the Appellant has a 'permanent establishment' in India in terms of Article 5(1) of the India-Korea DTAA and that the Appellant also has a 'business connection' in terms of section 9(1) of the Act. On the basis of these findings, it was alleged that profit arising in the transactions of sale of raw material, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per DRP's direction in the following manner: Particulars Amount (INR) Total Salary cost of the expatriates employees (as per Form 16 issued by LG India) 16,29,91,064 Profits to be attributed to the India PE 25% Attribution of profits 4,07,47,766 Profit Margin 20% Total profits attributed to the India PE 81,49,553 15. Thus, the AO attributed an income of INR 81,49,553 in addition to the returned income as income allocable to the Appellant's PE in India. 16. Meanwhile Appellant along with the other group companies filed SLP's before the Hon'ble Supreme Court but Appellant withdrew SLP filed challenging the validity of the reassessment proceedings with liberty to pursue statutory appellate remedy. The Hon'ble apex Court vide order dated 16.01.2018 held as under: - "8. In these matters the DRP/Assessing Officer have come to the conclusion that the petitioner has a PE in India. However, the petitioner prays for permission to withdraw these five special leave petitions and to pursue the statutory remedy under the Income Tax Act, 1961. These special leave petitions are, accordingly, dismissed as withdrawn with liberty to the petitioner to pursue its statutory remedies. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant year. The ld DRP therefore without considering the profit attribution by the ld AO directed him to take the profit attribution at 20 % of profit margin of 50 % of salary cost of expatriates in India. 20. Now the assessee has challenged the order of the ld AO on existence of PE as well as the Profit attribution also. 21. Ld Authorised Representative, Shri Ajay Vora , Ld Senior Counsel , first took us to the concept of PE . He submitted that Article 7 of the DTAA deals with taxation of business profits and provides that business profits arising to a Korean enterprise would be liable to tax in India only if the Korean enterprise has a PE in India. In such a situation, so much of the profits as are attributable to the PE would be liable to tax in India. He referred to term "PE" as defined in Article 5(1) of the DTAA. He stated certain illustrations of a typical PE viz. a place of management, branch, office, premises used as a sales outlet etc. It is submitted that the essential characteristics of a fixed place PE for Article 5(1) as provided under the OECD Commentary are as follows: i. the existence of a 'place of business', i.e. a facility such as premises or in certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ pgs. 363,372, 408 & 413; 2. DIT vs. E-Funds IT Solutions : [2014] 364 ITR 256 (Del) placed @ pgs. 205-281 of the case law paper book - Vol. I - relevant discussion @ pgs. 236-242, 257, 258 & 277; 3. ADIT vs. E-Funds IT Solutions : [2017] 399 ITR 34 (SC) placed @ pgs. 416-457 of the case law paper book - Vol. II - relevant discussion @ pgs. 434-441, 452-453. (Approving the decision of the Delhi High Court) On the basis of above legal grounds, he submitted that there is no fixed place available at the disposal of the Appellant at the premises of LEGIL in India (or any other place in India) nor is the alleged fixed place used to carry on any business of the Appellant in India, much less core business of the Appellant. 23. He submitted that LGEIL [ L G Electronics (India) private limited] is a separate and independent legal entity as it is a company incorporated in India under the provisions of the Companies Act, 1956. On 10th Mar 1997, the Appellant entered into a foreign collaboration agreement with LGEIL (Page No. 1188 of Paper book 3). The said company is a distinct legal entity which is carrying on business in its own name and is accountable for its turnover / profits. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve for Tax purposes if it sub contracts entirely or partially to associated enterprises or it acquires the means required for the contract's execution from associated enterprises. The latter is particularly true for the hiring out of employees as temporary workers. If the parent company makes personnel available to the subsidiary for remuneration, than the activity of this 'hired labour' is to be attributed to the subsidiary and does not constitute a permanent establishment of the parent doing the hiring-out. This is different, however, as well as, in cases of subcontracts if the parent assumes the economic risk of the contract's fulfillment in relation to the main customer. In this situation the parent company and the subsidiary have in fact established a company of which they are partners. This will lead to a permanent establishment for the partners if the general preconditions are fulfilled." 24. He further refereed to Paragraph 40 of the OECD Commentary on Article 5 provides that it is generally accepted that the existence of a subsidiary company does not by itself, constitute that subsidiary company as a permanent establishment of its parent company. This follows from the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork to the Indian subsidiary to save costs; * Whether or not activities performed by the Indian subsidiary were core activities; * Free of cost supply of intangibles by the foreign company(s) to the Indian subsidiary. 26. After showing us above legal position, he referred to the facts of the case and submitted that in the present case, it will be seen that LGEIL is a distinct and independent legal entity carrying on its independent business, as evident from the following: i. LGEIL purchases almost 67% of its raw material from third party vendors and is not dependent upon the Appellant for raw material and spares (pg 370). ii. The import of finished goods from the Appellant by LGEIL constitutes only 10% of its total sales (pg 389). iii. LGEIL manufactures products in India according to the technology / design and drawings provided by the Appellant and uses the brand name 'LG' owned by the Appellant on the products manufactured, in terms of the Technology License Agreement, against payment of royalty. iv. LGEIL employs around 15000 personnel - permanent and temporary, several key positions are held by Indian Nationals v. LGEIL has an indigenous R&D facility, which is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employment of such employee in case the services are not found to be satisfactory as stipulated in the appointment letter. Further, at the end of the tenure, the expatriate employee, in exercise of lien on employment with the Appellant, has the option to return to the Appellant Company - the same, however, is a matter of individual choice and decision. From the aforesaid, it would be clear that during the period of deputation, LGEIL is both, the legal and economic employer of the expatriate employee(s) and it cannot be said that the Appellant company exercised control over the affairs of LGEIL through the expatriates employees seconded to LGEIL. E supported his arguments by the following judicial precedents. a) The Delhi bench of the Tribunal in the case of HCL Infosystems Limited vs. DCIT : [2002] 76 TTJ 505 having regard to the fact that the foreign technicians deputed by Hewlett-Packard to the assessee's joint venture in India - filed application with the Foreigners Regional Registration Office ("FRRO") for taking employment in India, were holding employment visa, were given designation / position in the assessee company, were given duties and responsibilities as specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly evident that the expatriate employees are working exclusively for LGEIL during the tenure of their secondment and have simultaneously is being released for the period in question by the Appellant. He submitted that the assessing officer erred in holding that the expatriate employees during the period of deputation to India continued to be employees of the Appellant Company and were carrying on business of the Appellant Company in India. 28. He further submitted that assessing officer has drawn adverse inference from selective reading of statement of the expatriate employees recorded during the course of survey at the premises of LGEIL on 24.6.2010. It is also pointed out that the assessing officer has ignored statements of some of the employees recorded in the course of survey, to the extent that the same did not support the alleged inference sought to be drawn by the assessing officer. He submitted that the inference sought to be drawn by the assessing officer from the ex-parte statements recorded during the course of survey that the Appellant had fixed place PE in India, is erroneous for reasons that there is No evidentiary value of submissions recorded during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are conducted by the sales and marketing and this information is then shared with the product company which further develops the technology. This technology is imported by us in India." * Statement of Mr. Yashovardhan Verma, (Page 668-669) "Q.20 Who is responsible for deciding the marketing strategy of LG India?" A. "Product marketing strategy are decided by me with my team and my MD. LG Korea has no role." .... .... ..... "Q.21 What is the role of LG Inc.?" A. "Nothing" "Q.22 What is the role of LG Inc. Asia in it?" A. "Subsidiaries like LG India decide their own strategy specific to the market and are accountable for the results." "Q.16 In what manner is the supervision and control done by LG Inc. over LG India?" A. "In the capacity of majority shareholder." * Statement of Mr. H.D Rew, (Page 697), "Question: How the rate of items to be procured be decided?" A. "We negotiate the price when vendors to get the competitive prices." "Question: Who decide that the prices are competitive one?" A. "In some big items such as steel, Resin, I decide the price while in most of the case, HOD of the Procurement Team decide the rate. MD has not having any role in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dynamics and Indian consumer preferences. This is based on various consumer facing researches which we keep doing time and again. About selection of product- our choice is limited to the offering made as per the Menu Card and cannot chose any other besides that." Qn. "Who decides the import of products for LG India and how is the pricing done?" A. "As per the PRM (product road map -Menu Card) for India - there are some products which are manufactured in India and some aspirational products cannot be manufactured because of either economies of scale or technology or some other reason. This is where I shortlist the models from the Menu Card. This involves pricing discussions also. The basis of pricing area as follows...what is the price of competitors in the market, what is the amount of money a consumer is willing to pay for a particular model or a feature. This is where we get into discussion in finalizing the price at which we need to launch it." * Statement of Mr. Vipin Gupta, (Page 719) Q. "What are the various imports made by your factory give details?" A. "Generally we import the items where the local substitutes or technology is not available like semi con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome for interview to India or not. Also whether the Indian directors visit Korean office for recruitment or not? Answer: The MD of LG India forwards the requirement of Korean candidates to HR at head quarter. Based upon that they propose the available candidate whose willingness is prechecked by them. From this list the candidates are interviewed either through VC or whenever senior person visits Korea they interview them." * Statement of Mr. Chang Sil Lee, (Page 712) "Qn. Where were you employed earlier and how did you get your employment in India?" A. I was employed in corporate planning team in Korea. The corporate HR department in Korea informed me about the position in India. The India HR department corresponds with HR department of Korea and then I was informed about my selection by the HR department of LG Korea. I did not submit any resignation to my earlier employer i.e. LG Korea. It was a transfer of position from Korea to India which was informed to me by the HR department of LG Korea. Normally the term of deputation/transfer for foreign service expatriate is four years which can be extended or reduced in discussion with the MD of LG Electronics India and global C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t India and discussed these with me and my team members. The meetings take place in our office." 31. With respect to the short term visits of expatriates who visited India came for purposes, he submitted that they visited for implementing the technology made available by the Appellant under the Technology License Agreement, meeting customers in India with respect to the goods imported by LGEIL from the Appellant and sold in India and for stewardship activities in the capacity of shareholder and owner of LG brand. Merely because no record is kept by the Appellant or LGEIL in respect of short term visits of employees of the Appellant, would not be a ground to infer that such employees carried on the business of the Appellant in India from a fixed place situated therein. 32. He therefore submitted that Appellant had no office / place of management in India so to constitute fixed place PE in India. Furthermore, even if it be assumed that there was such fixed place available to the Appellant (which is strongly disputed), it has not been shown by the Revenue that such alleged fixed place was available at the disposal of the Appellant. It is the submission of the Appellant that even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther attribution of profit to the alleged PE. For this proposition he relied up on Hon. Supreme Court's decision in the case of Morgan Stanley (292 ITR 416) , Director of Income Tax V. E-Funds IT Solution [2017 (399 ITR 34) (SC)] , order dated 14.03.2018 in CA no. 2833 of 2018 in the case of Honda Motor Company Japan. He submitted that arm's length principle as the primary basis for attributing profit to PE laid down by the Hon'ble Supreme Court, has been extensively followed High Courts / benches of the Tribunal in the undernoted judicial precedents: * SET Satellite (307 ITR 205) [Bombay High Court] * BBC Worldwide (307 SOT 253) [Delhi ITAT] * E-fund IT Solutions (364 ITR 256) [Delhi High Court], confirmed by Supreme Court * Rolls Royce Plc (339 ITR 147) [Delhi High Court] * Rolls Royce Singapore (347 ITR 192) [Delhi High Court] * Hyundai Rotem Company (ITA No. 3300 to 3302/DEL/2009) [Delhi ITAT] * Galileo International (114 TTJ 289) [Delhi ITAT] * Ranbaxy Laboratories Limited (114 TTJ 1) [Delhi ITAT] iii. To support his above contention, Ld AR referred to observation of the OECD in Model Tax Convention on Income and on Capital (2014 version) on paragraph 2 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that assessment order and the DRP directions are emphatically relied upon and his submission is restricted only to specific aspects. On balance aspects, above orders and oral submissions are relied upon. 36. On the issue of statement of employees' unreliable evidence he submitted that The assessee was repeatedly asked to furnish copies of all the agreements governing its association with LGEIPL (2007-08, PB-II, p.652). In this regard, the observations of the Hon'ble Special Bench in the case of LGEIL in its order dt. 21/01/13, where in it is held that :- "An agreement was entered between LGK and LGI on 10th March 1997, as per which both entered into a mutual foreign collaboration agreement. Thereafter a Technical assistance and royalty agreement was entered into between these two entities on 1-7-2001 by which LGI, in the capacity of a licensee, obtained a right to use the technical information, designs, drawings and industrial property rights for the manufacture, marketing, sale and services of the agreed products from the LGK i.e. the licensor." 37. However, this basic document defining the relationship between the assessee and LGEIL was never produced. Accordingly, and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the argument of the ld AR placing heavy reliance on the directions of Hon'ble Supreme Court while disposing off the SLP. He submitted that in this regard it won't be out of context to quote from the order of Hon'ble Tribunal in the case of LGEIL in ITA No.5140/Del/2011; A.Y. 2007-08 dt.08/12/14 where it was faced with an identical observation. "8.9. It can be seen from the observations of the Hon'ble Supreme Court that nowhere the view of the Hon'ble High Court has been reversed.......It was further made clear that 'the authorities will decide the matter uninfluenced by any of the observations made in the impugned judgment.' The material fact to be noted is that the Hon'ble Supreme Court did not vacate the principles laid down by the Hon'ble High Court on merits, but simply held that in the absence of factual position concerning that case in writ petition, the authorities under the Act were to decide the proceedings independent of such principles. In so far as the legal principles articulated by the Hon'ble High Court.......are concerned, these stand as such. If these are not affirmed by the Hon'ble Supreme Court, the same cannot be equally consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn filed for the subject AY. Accordingly, the above details are not applicable to the assessee. (2007-085, PB-II, p. 606-607) - 20. Please give names of your employees who visited India ..... purpose of their visit and duration of stay in India & - 21. Please furnish the details of personnel visiting India with their names, profile, period of stay and nature of services rendered. Reply dt. 21.03.16- As desired, the details of expatriate employees visiting India on long term basis is enclosed in Annexure-3 (p.547). In this regard, we wish to submit that these expatriates were employed by LG India and were not working under the direction, supervision and control of the assessee during the deputation period. - 22. Please furnish the above details of the employees of your associated enterprises.(Not furnished) - 23. Please give the names and address of the employees, residents and non-residents who were working for each project. Also give the duration of their stay at each project site. Reply dt. 21.03.16- The above details are not applicable as the assessee has not executed any project in India. (p.525) - 43. Please furnish the Appointment Agreement and the terms and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y our HQ Seol, South Korea. ii. I had visited China,Thailand,South Korea in connection with my work.I visited the above country meeting with the Executive of LG. * H.D.Rew-(PB-II,p-693-698) i. I visited several countries...sometime I visit to procure material, sometimes for R&D work. I visited Korea in connection with services meeting with HQ people.(p.695) ii. I am reporting to MD Mr. M.B.Shin of LGEIL &some part to HQ, Korea. There is no clear classification. For LGEIL, I am reporting to MD and whenever I want some support, I report to HQ, Korea. To enhance the manufacturing capability and for technical know-how and manufacturing performance, I report to Korea. Parallel-ly, I am reporting this also to MD, LGEIL as he is overall in-charge of the company.... In some case I directly report to HQ where I need to get support such as technical support.(p.696-697) * Jay Hyun Lee- (PB-II, p-701) i. I visited India in November 2009 on the call of Mr. H.D.Rew and he interviewed me and asked me to join LGEIL to improve the productivity of AC as I am AC expert. * Mong Nam Jung- (PB-II,p-701-706) i. Since my joining, I have gone abroad (Korea)approx. 6-7 times....we decide our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en LGEIL and other LG group companies. 42. He therefore submitted that In the light of the submission of the assessee that there is no written contract/agreement between SGEK & SGEIL governing the terms and conditions of employment of the seconded employees to LGEIL, the entire process of employment of expat personnel with LGEIL can be summed up on the basis of the statements given by the expats themselves as under- LGEIL intimates its need for expat employees to LGEK LGEK selects the expat employee to be deputed to LGEIL LGEK informs LGEIL the salary to be paid to the expat (cannot be less than the salary earlier drawn) The position of the expat in his/her new employment remains unchanged (cannot be posted to a lower post) Interview by the LGEIL is not mandatory The expat need not resign from his earlier post (it is a 'transfer of position from Korea to India') Letter communicating the transfer and posting with LGEIL may be issued by LGEK The expat's promotion to a senior position is decided by LGEK The next posting after completion of the 'tenure' of the expat in LGEIL is decided by LGEK. Expats may report directly to LGEK or seek assistance from LGEK or visit LGEK ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the survey result, Korea decides whether the existing technology will work or some changes are required d. Development agreement is made between India and Korea accordingly. e. LGEIL coordinates with LGEK to define such product development process. f. Product development is a 4 step process- i. Making of Prototype ii. Product Verification iii. Quality Verification iv. Mass Production g. The first two steps are done in Korea and at the time of product verification, LGEK makes bill of material and charges it to LGEIL. * The Indian company is controlled by all the three verticals (CEO, Regional HQs & COO) The MD of the Indian Co reports to the heads of all the presidents i.e. Heads of Mobiles, Home Ent & also to RHQ. (PB-II,p.692) * Manufacturing Excellence, Global Best Practices, Training etc. supported by 'Product Company'(LGEK)(PB-II,p.662) * Some expenses are borne by 'Product Company'(PB-II,p.662) b) Marketing- * Other divisions i.e. HR, Sales, Marketing, Customer Service, Finance, Supply Chain reports to MD, LGEIL (PB-II,p.662) * The MD of the Indian Co (in turn)reports to the heads of all the presidents i.e. Heads of Mobiles, Home Ent& also to RHQ. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness presence of LGEK in India in general and within the premises of LGEIL in particular. To that extent, it also leads to the satisfaction of the 'Disposal' and 'Business' tests relating to presence of PE under Art-5(1) of the DTAA. 47. On the issue of Legal and Economic Dependence & Influence of LGEK on LGEIL, he submitted that this issue also came up before Hon'ble Special Bench in the case of LGEIL. The observations of Hon'ble ITAT in this regard are reproduced as under- Repercussions of parent AE's influence "11.1. The ld. DR contended that- - The foreign AE exercises complete control and influence over the economic behavior of the assessee because of it being hundred percent subsidiary. - ...... all the arguments advanced by the ld. AR to the effect that it is solely for the assessee to decide on the question of incurring of AMP expenses, are based on the presumption of separate entity concept of the assessee vis-a-vis the foreign AE, which is really not applicable in the present case because of the relation between the two. - Even though the assessee and foreign AE are separate legal entities in two different tax jurisdictions ....... the assessee cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - The sum and substance of his contention was that since LGK exercises complete control over the economic decisions of LGI, the separate legal character of the assessee should be overlooked notwithstanding the fact that LGI is a legally separate entity. 11.3. We are convinced with the submissions advanced on behalf of the assessee in this regard but only to the extent of not ignoring the legal character of the Indian AE simply because of the close relationship between the two enterprises. If we proceed with the presumption that since the foreign enterprise has influence over the economic behavior of the assessee and hence the separate legal character of the Indian enterprise should be overlooked, then it would mean that the such separate legal character of the assessee will be lost not for one transaction but for all practical purposes. In that case only the foreign entity will survive as a taxable unit even under the Act. Probably it is not the case of the Revenue also as it is the Indian entity which has been subjected to the present assessment. 11.4. However, we are not agreeable with the remaining part of the contention of the ld. AR that the legal character of one enterpri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and effective marketing and promotion strategies in the respective countries........In answer to question about the building of brand "LG in India and how LGK controls this brand in India, he replied that "They give us set of guidelines on how to depict the brand in various places like advertising, shops etc". In response to the next question about the names of the expatriates employed in the marketing department and their role and responsibilities, he gave the name of Mr. Gilbert Ahn, Vice President Marketing, by stating his role to coordinate marketing inputs between India and Korea for smooth implementation. He also named four persons with the names Mr. D.S. Shin (Appliances) ; Mr. Joy Seo (TV); Mr. M.J. Jeon (AC.); Mr. G.B. Kim (DAV); and Mr. Jaesung Choi (GSM mobiles) as assisting in the strategy and coordination of marketing development with Korea. From the statement of Shri L.K. Gupta, it is apparent that his assertion was on the advertising policy of the LG as a whole and not specific to the particular year of the recording of such statement. It cannot be said that Shri L.K. Gupta, the Chief Marketing Officer of the assessee was oblivious of the global BOS adopted by LG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th express as well as oral. So long as there exists some sort of understanding between two AEs on particular point, the same shall have to be considered as a transaction, whether or not it has been reduced to writing. 9.12. The ld. AR has vehemently argued that when the assessee incurred AMP expenses for its business purpose and recorded them as such, the Revenue went wrong in re-characterizing this transaction by splitting it into two parts, viz., one towards advertisement expenses for the assessee's business and second towards the brand-building for the foreign AE. He fortified this contention by relying on the judgment of EKL Appliances Ltd. (supra). There is absolutely no doubt that para 17 of the judgment unambiguously lays down that the tax administration should not disregard the actual transaction and substitute other transactions for it. However, it is imperative to note that the proposition laid down in para 17 is not infallible or is not an unexceptionable rule. Caveat has been included in the immediately next para no. 18. Two exceptions have been carved out of the general rule against re-characterization of any transaction asset out in para 17, viz. "(i) where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of Hon'ble Tribunal in the case of LGEIL. He submitted that It is well established that historically, the employees of the assessee have been visiting and present at the premises of LGEIL year after year and it was obligated to provide them with a "geographically fixed space"(both for the purpose of office/ business/ bureaucratic work as well as for residence) as well as other perquisites associated with it. The fact that the MD of LGEIL and other expats are employees of LGEK and have a place at their disposal at the premises of LGEIL proves that such places can form a permanent and fixed place at the disposal of LGEK in India. In view of the above, the claim of the assessee that there was no fixed place at its "disposal" deserves to be rejected since the assessee was always having such a geographically fixed place at it's at its "disposal". 49. He further submitted that the claim of the assessee that it didn't have a place at its 'disposal' is also examined in the following paragraphs on the basis of the facts of the case and from the perspective of the Hon'ble Supreme Court in the case of Formula One World Championships Ltd. (394 ITR 80)(FOWC) and eFunds IT Solutions (86 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same time, it is also clarified that the mere presence of an enterprise at a particular location does not necessarily mean that the location is at the disposal of that enterprise." (Emphasis supplied) 50. He submitted that Hon'ble SC further explained that the term "Place" should be understood and interpreted in the context as well as through the lens of the object and purpose of Art-5 of OECD/UN MC rather than as per characterization from a purely legal (both common & civil) perspective. This is a reiteration of what Hon'ble SC had observed in the case of Azadi Bachao Andolan. In that case it was held that - "130. The principles adopted in interpretation of treaties are not the same as those in interpretation of a statutory legislation. While commenting on the interpretation of a treaty imported into a municipal law, Francis Bennion observes: "With indirect enactment, instead of the substantive legislation taking the well-known form of an Act of Parliament, it has the form of a treaty. In other words, the form and language found suitable for embodying an international agreement become, at the stroke of a pen, also the form and language of a municipal legislative instrume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach by the Indian Courts itself (i.e. Ericsson and another competing enterprise). The Hon'ble SC went on to build on and expand the concept as explained by Vogel i.e. "intensity of control" over the 'place' as the deciding factor for 'at the disposal' issue. It was recognized that this 'intensity of control' varies from activity to activity and depends upon the 'business activity' carried on by the enterprise from such place. As per Vogel "The degree of control depends on the type of business activity that the taxpayer carries on. It is therefore not necessary that the taxpayer is able to exclude others from entering or using POB."This approach and methodology was confirmed by Hon'ble SC when it held - "In all, the taxpayer will usually be regarded as controlling the POB only where he can employ it at his discretion. This does not imply that the standards of the control test should not be flexible and adaptive. Generally, the less invasive the activities are (as in the case of Showa), and the more they allow a parallel use of the same POB by other persons (i.e. employees of LGEK), the lower are the requirements under the control test." 52. He submitted that Hon'ble SC furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise for the purpose of performing such activities. The painter example does not offer any reference regarding the permission of the painter to enter a building, thus lacking of sufficient control over his assumed place of business. In that context it seems, that the mere performance of the business activity may constitute a PE according to the commentary, as long as an enterprise is exercising its business activity for a sufficiently long period of time. (P.244)" 53. He stated that above observations show that the power to effectively control a location and the permanence of the business activities are interconnected issues. If an enterprise is able to exert a significant level of control over the place, the duration of an activity is less important in order to create a PE. In other words, if the effective control over a location is evident (e.g. in the case of a legal right to use a place), a relatively short time period will be enough to create a PE. On the other hand, if the activity is performed over a rather long time span, no distinctive right to use or access a place is required under the commentary in order to constitute a PE. In such a case a (low) degree of control over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrol, if at all, would be for that period only." The Hon'ble Supreme Court accordingly proceeded to affirm the decision of Hon'ble High Court by observing as under- "70) We are also of the opinion that the High Court has rightly concluded that having regard to the duration of the event, which was for limited days, and for the entire duration FOWC had full access through its personnel, number of days for which the access was there would not make any difference. This aspect is discussed by the High Court in the following manner, and rightly so: "52. It is evident that for the duration of the event as well as two weeks prior to it and a week succeeding it, FOWC hand-full access through its personnel, the team contracted to it, both racing as well as spectator teams and could also dictate who were authorized to enter the areas reserved for it. No doubt, in terms of the agreement, i.e. RPC, Jaypee was designated as the promoter or the event host. A look at the RPC and its terms as well as the other terms contained in the agreement between the Jaypee on the one hand and Allsports, Beta Prema 2 as well as FOAM show that Jaypee's capacity to act - though it promoted the event, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, which are of relevance. We would like to take note of those judgments as we had agreed with the conclusions of the High Court on this issue: In Universal Furniture Ind. AB v. Government of Norway25, a Swedish company sold furniture abroad that was assembled in Sweden. It hired an individual tax resident of Norway to look after its sales in Norway, including sales to a Swedish company, which used to compensate him for use of a phone and other facilities. Later, the company discontinued such payments and increased his salary. The Norwegian tax authorities said that the Swedish company had its place of business in Norway. The Norwegian court agreed, holding that the salesman's house amounted to a place of business: it was sufficient that the Swedish Company had a place at its disposal, i.e the Norwegian individual's home, which could be regarded as 'fixed'. In Joseph Fowler v. Her Majesty the Queen 1990 (2) CTC 2351, the issue was whether a United States tax resident individual who used to visit and sell his wares in a camper trailer, in fairs, for a number of years had a fixed place of business in Canada. The fairs used to be once a year, approximately for three w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of eFunds IT Solution and others, "....the carrying on of the business of the enterprise through this fixed place of business. This means usually those persons who, in one way or another, are dependent on the enterprise (personnel) conduct the business of the enterprise in the state in which the fixed place is situated." In the light of above, the question that needs to be answered is "whether the business of the enterprise is wholly or partly being carried on from such fixed place". It is the contention of the assessee that the premises of LGEIL and more particularly the place at the disposal of the expat employees of LGEK are EXCLUSIVELY used for business of LGEIL ONLY. In this context, it won't be out of place to re- highlight some of the replies of the expat employees relating to the model of business process they are responsible for. * Manufacturing division of LGEIL reports to 'Product Company' (LGEK) and not to MD, LGEIL- M.B.Shin, MD, LGEIL (PB-II,p-661) * Sourcing team of manufacturing unit makes decisions regarding imports. - M.B.Shin, MD (PB-II,p-662) Thus, since manufacturing unit reports to LGEK, it necessarily follow that MD LGEIL is not the deciding authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orea and they want to bring it to India. The second step is survey of Indian market which is done by experts of Korea and experts from India. Based on the survey result, Korea decides whether the existing technology will work or some changes are required Development agreement is made between India and Korea accordingly. LGEIL coordinates with LGEK to define such product development process. Product development is a 4 step process and the first two steps are done in Korea and at the time of product verification, LGEK makes bill of material and charges it to LGEIL. i. Making of Prototype ii. Product Verification iii. Quality Verification iv. Mass Production -Vipin Gupta, Factory Head (PB-II,p.719) * There is Mr. Gilbert Ahn, VP Marketing and his role is to coordinate marketing inputs between India and Korea for smooth implementation. Next is Mr. D.S.Shin (Appliances), Mr. Joy Seo (TV), Mr. M.J.Jeon (AC), Mr. G.B.Kim (DAV), Mr. Jaesung Choi (GSM Mobile). Their role is assisting in strategy and coordination with Korea. - Lakshmikant Gupta, Chief Marketing Officer (PB-II,p.715) * Influence of LGEK in the sphere of marketing, business promotion & advertisement as held by Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that visiting senior personals also monitor performance and direct interaction with the customers. On top of it is stated that after sales and warranty services are also provided by the assessee. He therefore submitted that which segment of the business of the assessee is not carried out in India is a question. He therefore submitted that there is no doubt that the business of the assessee is carried out from the fixed place of business are available to the assessee in the form of its subsidiary in India where it seconded employees perform all the core functions of the business of the assessee. 61. Ld AR in rebuttal to the arguments of the revenue about evidentiary value of the statement of employees submitted that argument of revenue that even if the statement recorded during the course of survey, the same are in the nature of information which can be taken into account by the assessing officer while framing the assessment, is devoid of any merit. In this connection, the learned CIT DR had placed reliance upon the decision of the Bombay High Court in the case of Pebble Investment as also the fact of dismissal of a SLP against such decision. He submitted that the statement recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reliance placed by the CIT DR on para 8.9 of the decision of the Special Bench in the case of LG Electronics (supra) is clearly misplaced. The aforesaid observation by the majority in the Special Bench decision been reversed by the Hon'ble Delhi High Court in the case of Sony Ericsson Mobile Communications India Pvt. Ltd. Vs. Commissioner of Income Tax [2015] 374 ITR 118 (Del) para 156 at page 1072 of paper book 3, Maruti Suzuki India Limited vs. CIT [2016] 381 ITR 117 (Del) para 52 to 55 at page 1137 and 138. Having regard to the aforesaid, the question regarding existence of PE in India has to be looked into by the Tribunal de novo without being influenced by any observation of the Hon'ble Allahabad High Court to the contrary. 63. On the issue of manner in which those statements must be appreciated, he submitted that those statements must be viewed in harmony. He submitted that ld CIT DR relying upon para 27.9 of the decision of the Delhi Bench of the Hon'ble Tribunal in the case of GE (supra) contended that the statements recorded during survey have to be viewed in harmony. He submitted that without prejudice to the submissions that the statements recorded during survey hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation regarding visits of short term ex-patriates should not be viewed adversely. 67. On the functional independence of the Indian subsidiary he submitted that with regard to recruitment of expatriate employees, the process and functions relating to manufacturing, marketing etc., the CIT DR had contended that such functions of LGEIL are controlled by the Appellant. It is submitted by the CIT DR that the Appellant was actively involved in all the activities/functions of LGEIL through its employees-whether seconded or visiting; the manufacturing operations of LGEIL were controlled by the Appellant and as a consequence, the import, procurement, marketing of LGEIL were also controlled by the Appellant; since the Appellant gets royalty based on the sales of LGEIL, monitoring of marketing/sales of LGEIL is of paramount importance to the Appellant; the employees of Appellant visits India for quality control, optimization of sales functions etc., leading to higher royalty. On that basis, the CIT DR had sought to infer functional dependence of LGEIL on the Appellant, to conclude that the Appellant has fixed place available at its disposal in the premises of LGEIL. In this regard, he subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that - (1) the assessee had a fixed place PE in India; and (2) in attributing profit to the alleged PE as percentage of the salary paid to the expatriate employees employed by LGEIL. He submitted that order of the assessing officer therefore calls for being reversed. With regard to the marketing functions, the CIT DR had sought to infer the functional dependence of LGEIL on the Appellant, which is again contrary to the facts of the case as evident from reading of the expatriate statements recorded during survey. 68. With respect to after sales service and warranty issue, he submitted that The CIT DR has referred to Article 21 of the technical assistance agreement dated 01.01.2002 where under the Indian subsidiary has to render warranty service in respect of the products supplied by the Appellant without cost to the Appellant. It is the submission of the CIT DR with reference to the annual accounts of the Indian subsidiary that contrary to the aforesaid Article of the technical assistance agreement, the Appellant has reimbursed the Indian company certain expenses including rent, depreciation, power, fuel and electricity, which, according to the CIT DR leads to the inferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the effect that the advertising strategy of LGEIL was dictated and controlled by the Appellant. It is respectfully submitted that reliance placed by the CIT DR on the aforesaid observations contained in paras 9.9, 9.12, 11.1, 11.3, 11.4, 12.3 and 12.4 of the majority decision is completely misplaced. The Special Bench decision (majority view) held that LGEIL was rendering service of brand promotion to the Appellant for which LGEIL was to be compensated. In that view of the matter, if LGEIL order as per the majority decision rendering brand promotion services as per the requirement of the service recipient, the Appellant fails to understand how such observation/ finding can lead to an inference of fixed place PE in India. In a contract of service, where the service recipient issues instructions to the service provider as to the scope of service to be provided, the manner in which the service is to be performed etc., and it does not mean that the service recipient controls the business of the service provider. That apart, the above observations made in the majority decision of the Special Bench are only confined to the expenditure incurred by LGEIL on advertisement and publicity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess of importing goods (by LGEIL), started in India and follow up was done in India, attribution of profits to the alleged PE in relation to the sales made by the Appellant to LGEIL was required. In rebuttal he submitted that , the goods exported by the Appellant to LGEIL are against purchase orders placed by LGEIL. The manufacturing of goods takes place outside India and the title of the goods passed outside India. In that view of the matter, the sales being concluded outside India, no profit in respect thereof is attributable to the alleged PE in India. 73. In reply ld CIT DR further contended that notwithstanding that the transaction of export of goods are accepted at arm's length by the TPO, there should be further attribution to the alleged PE in view of the fact that the TPO had not considered the functionalities and risk involved in manufacturing. As per the CIT DR, the finding of the TPO was inconclusive and hence could not be relied upon. 74. On no further profit attribution if transaction are at arm's length he submitted that TPO having accepted the transaction between the Appellant and LGEIL to be at arm's length in the transfer pricing assessments of both the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronics Corporate Korea. E. Who decides the pricing of import? I am guided by the Korean company Samsung electronics Korea, then I decided the purchase. Statement of Sri Soonkwang, s/o Sri Jeonhyun Kwon A. Please give your identity? I am Soonkwang working as General Manager (Procurement) of LG Electronics, Noida since December, 2007. B. Please explain the procedure of procurement of material in LGEIL in detail? After receiving part development required from the R & D, I contact to supplier and then finalized the cost through negotiations. After finalization, I issue purchase order through vendors and then suppliers dispatch material to LGEIL. C. Do you report to the Director (Mfg) of LGEIL or to the head quarter in Korea or both? I report to Director (Mfg) in India. For the import I discuss directly with the concerned suppliers. E. How is the rate of item to be procured decided? Based on our target, the workout detail working of cost of raw material involved in parts and their conversion cost. This is compared with the different suppliers and finally on the basis of right cost, right price and quality, I decide the price. Sometimes I also discuss with factory head and Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is done in Korean normally. But when any Indian or non-korean is involved we use English. Statement of Shri H.D. REW S/o J.H. REW A. Please identify yourself. I am H.D. REW working as Director (Manufacturing) in L.G. Electronics India Pvt. Ltd. since January 2007. I am looking after manufacturing of the L.G. products which includes procurement, R&D and production. C. What is your present salary, are you getting any salary from any other concerns other than LGEIL, Noida. Presently I am getting salary of approximately 75 lacs from LGEIL, Noida and I am not getting salary from any other concern. J. In LGEIL, to whom you are reporting. I am reporting to Managing Director Mr. M.B. Shin of LGEIL, Noida and some part to HQ to Korea. Whether there is any rea in which you are reporting to HQ, Korea without informing MD, LGEIL? No. There is no such area where without report LGEIL, matter has been discussed with HQ, Korea. But in some case I directly report to HQ where I need to get support such as technical support. L. Please explain the procedure of procurement of material in LGEIL in detail. We are having our production plan on computer software and as and when desired, we can f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. E. Does this reply in Q4 mean that the salaries of the employees of Samsung India Electronics Pvt. Ltd. is paid by SEC South Korea and the same is reimbursed by SIEL. No. Samsung Electronics is only a conduit for the payments in expatriate Bank a/cs in Korea. Salary expenses are incurred in SIEL India and proper income tax on the salaries deducted from individual of expatriate employees salary and deposited. F. Pls explain why such remittances are termed as reimbursements. The salary paid is expense of SIEL, India as stated above. Just for Administration purpose the amount is paid to SEC Korea which in turn paid to expatriate personal bank a/cs. G. In reply to Q4 and Q3 you have stated that the above methodology adopted for Administration conveyance of the expatriate employees, where is in reply of Q no. 6 you have stated that SEC paid this amount to personal Bank a/c of the employees when such amount is remitted to SEC. since the remittance of salaries are made to SEC on Qtrly basis, this would mean that a person I would get his salary in his South Korea Bank after 3months of the receipt of salary in India. How would you term this as a conveyance of such employee. I am n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Systems in Samsung Electronics India Ltd. I have been working here for 7 months. B. How frequently do you deal with the expats while carrying out your duties as VP-Sales & Marketing? Please give a detailed note on it. We are a technology Company & sometimes like whenever there is a new launch, we need one or two experts to come and train us and & sometime explain to our otential client. The request for such expat experts can be sent either by me or my direct reporties. C. Please refer to question @ Sr. No. 7 and your reply. Do you have any such expat experts working for you at present: We have few expat came few days back. Normally they are here in 2-3 months as perrequirement. There are 5 persons here: 1. Mr. Mahesh - for tech support. 2. Mr. Jiho Song - for tech marketing 3. Mr. Shin-for tech support. 4. Ms. Cha - for tech support. 5. Mr. Jaewoo Park- Marketing support. Are working to support my local unit as technical experts. They normally come to impart technical expertise to local engineers. They have come here on local unit's request for training & some tech support. This request is made to the R&D or Technical support Group bases out of South Korea. D. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident, Samsung Electronics Pvt., Ltd., HA (home appliance) marketing. I am a national of Republic of Korea. B. How often do you travel back to Korea? I travel back to Korea 1-2 times a year for business trip and family visits. My family is in Delhi with me and my parents are in Korea. C. What is the agenda for meetings in Korea? Produce line in India is discussed along with business strategy. The main product line and R&D is in Korea. At the address: 413 Mactan- Dong, Young Tong - ku, Suwan Ciy, Korea. This is the office of R&D and marketing. D. Who do you report to here? CEO - Jung Soo Shin, Deputy MD - Ravindra Zuithi They are both at present in South Korea on a Global Strategy meeting being held from 22nd June to 24th June at office premises 4B Mactan - Dong, Young Tong - Ku Suwan City, Korea of Samsung Electronics Ltd. All the country heads of Samsung Electronics ....coming for this meeting. Statement of Sri Lakshmikant Gupta, s/o Sri Durga Das Gupta A. Please give your identity? I am Lakshmikant Gupta working as Chief Marketing Officer of LG Electronics India since August, 2007. D. Who do you report? I report to the MD of LGEIL 6. Statement of Mr. J H Kyung, A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entify yourself? My name is M.B. Shin, Managing Director of L.G. Electronics India Pvt. Ltd. B-D, F. Since when are you working with LGEIL? Jan 2005. I was the head of Marketing that is the official title given by the HQ before joining LGEIL in Jan 2005. I was working in Seoul, South Korea with LG Electronics Korea. I was looking after the overseas market globally. The head quarter of LG Electronics Korea decided to send me here as head of marketing of LGEIL in 2007. The head quarter in Korea promoted me as MD, LGEIL. E. What is your role and responsibilities as the MD of LGEIL? One of the responsibility is to build LG as the best corporate citizen. Building LG as a very good brand image, No. 1 after sales service, best quality of product. F. Which all heads of departments report to you here in LGEIL? Other than manufacturing, which reports to the product company, and only indirectly to me by way of sharing information, other heads such as HR, sales, marketing, customer services, finance, supply chain. The product company supports the manufacturing excellence and global best practice by way of imparting training by sharing knowing and information of technology and best practi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before communicating I hear and discuss with Local people and hear the necessities and I summarize and communicate with HQ Marketing and Other Department. E. Since you are having R&D centre's in India at Bangalore and Noida, Then why is not such technology develop in these R&D Centres? Basically Samsung's philosophy is to make localized for operation (Sales & Marketing) and production. When local environment is not ready, Samsung HQ support to develop. And when all local functions are ready, whole development & Material purchase occurs locally. In the meantime, localization rate is increasing year by year. F. What is the role of GBM (Global Business Management) at HQ in deciding which products to manufacture or Trade? It is not GBM's decision to decide a specific models. On SIEL's requirement they develop and also SIEL select the models of local market's demand. GBM has more product and strategy function from global market perspective they discuss with global subsidiaries for products, price trend, and market development, marketing function. But, as they are more globally dedicated functional organization, SIEL is communicating with HQ to develop the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... core technology while launching in India, at times people from HQ do come. Statement of Shri H.D. Rew working as Director (Research & Development) of Manufacturing Deptt. at LG Electronics India Ltd., since Jan. 2007 E. What you are doing in Research & Development work? We have so many products. I have a team of thousand of persons in R & D and number of teams are working for each & every products separately. These teams have to report their progress to me be, being in-charge of the R&D Deptt. at Greater Noida. There are hundreds of persons and not thousands. Whether there is any Patent Right on your R & D since you are in manufacturing activities of various products of LG in Greater Noida? Yes. We are having our two patents of LG India as per my memory and exact number can be told after going through my records. Two Patents have been applied but not registered so far and one is under progress, out of these two. 8. Statement of Mr. Y.H. Cho, VP Sales -North Region in M/s Samsung India electronics (P.) Ltd. (SIEL) A. How did you carry product marketing as GBM GM in India? Discussion about, proper USP with each country subsidiary. We don't arrange direct marketing, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the work done in India for Samsung India Electronics ltd? I am paid my monthly salary in Korea, I collect bills for money that I spread during Stay and get reimbursements in Korea. G. Why is Samsung Electronics Corporation, South Korea paying you for the work you are doing in India for Samsung Electronics India Ltd. I don't know Statement on oath by Mr. Woody Nam, S/o Mr. Sang Taek Nam A. Please identify yourself. I am Asia Regional President of LG Electronics Ltd., Korea. C. What are your duties, accountabilities or responsibilities as Asia Regional President of LG Electronics Ltd., Korea? One of my duty as an Asia Regional President of LG Electronics, Korea is to liaison of the business activities of the company in different countries under my charge with HQ of the Company at Korea. In liaison work; I see mainly sales and marketing in the Region for which I am responsible. D. Ever since you took charge at your current post, how many times have you held meeting here in India? Approximately ten times in the period of 2 and half years. E. Can you tell us what exactly had in the today's meeting with your colleagues at G. Noida? First was the marketing strategy, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 had been duly complied with and all the information sought by the Assessing Officer had been supplied. C. Thereafter, it was highlighted that the assessment in the case of the Appellant is made under section 143(3) and not a best judgment assessment under section 144 of the Act. It can therefore, reasonably be inferred that the Assessing Officer was also satisfied by the information and details provided by the Appellant and made no grievance of the alleged non-compliance of the notice / questionnaire dated 11.11.2014. II. Short term Expatriates detail D. With regard to the details of the short term expatriate employees, the Appellant submitted the details of the current year short term expatriate employees and the purpose for visiting India vide referring to pages 1195 of the paper book volume 3. Pages 1196 to 1224 of the said paper book was referred to show the email communication with the respect to communication between the employees of LG India and the Appellant to schedule such short term visit of the Appellant employees. The email communication clearly establishes the case of the Appellant that the purpose of visit of such short term employees is for technical supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Distributors (Baroda) (P.) Ltd. Vs. Union of India : 155 ITR 120 and there is no quarrel to the said proposition. It was further pointed out that the said judgment has, in any case, been upset by the Hon'ble Uttarakhand High Court vide order dated 03.06.2016 in ITA No. 08 of 2012 (copy supplied handout). III. Attribution to PE H. The Appellant submitted that it had already established that LG India is, both, the legal and economic employer of the expat employees seconded by the appellant. Relying upon the statements recorded during the survey and the legal and factual submissions (refer earlier note), it was reiterated that all the functions performed by the expat employees are for furthering the business cause of LG India and, therefore, the existence of PE of the Appellant in India was not established. I. Without prejudice, it was submitted that once the transaction has been adjudicated to be at arm's length, no further attribution can be made to the alleged PE. To support its contention the Appellant relied upon the judgment of Honda Motor Company, Japan [2018] 301 CTR 601 (SC), Asstt. DIT v. E-funds IT Solution Inc 399 ITR 34 (SC) &DIT v. Morgan Stanley [2007] 292 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the said sub-section (3) of section 143, a presumption can be raised that such an order has been passed on application of mind. It is well-known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act the judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving premium to an authority exercising quasi-judicial function to take benefit of its own wrong." The said judgment has been affirmed by the Supreme Court in CIT vs. Kelvinator of India 320 ITR 561 (SC). M. Further, in the hands of Appellant, too, the Department has found the said transactions to be at arm's length. Copy of the order of Ld. TPO is at page 254 of the paper book volume - 1. It is important to note that the order passed by the TPO in the case of the Appellant is much after the conclusion of survey at the premises of LGIL and the preparation of the survey report. The allegation raised by the Department th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no application to the present case wherein it is established on facts that the TPO of, both, LGIL and the Appellant had accepted the transaction between the Appellant and LGIL to be at arm's length, after full and complete disclosure by the respective assessees and due application of mind by the TPO. IV. Validity of the High Court of Allahabad order R. With regard to the submission of the Department that the decision of the Hon'ble Allahabad High Court holding that further attribution to the PE was permissible despite the order of the TPO holding the transaction to be at arm's length, it was submitted that when the Hon'ble Supreme Court directed that 'It is also made clear that the Appellate Authority will examine the matter uninfluenced by any observation/finding of the High Court regarding the existence of a permanent establishment of the petitioner in India', the aforesaid observations of the Hon'ble Allahabad High Court have been negated / nullified. S. It would be appreciated that in terms of sequence, it has to be first established that the foreign company has a PE in India; thereafter, the question of attribution to the said PE would arise. In the present case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as shown that LG India is responsible for smooth and efficient supply of parts to servicers, parts distributors, or consumers, by purchasing and maintaining reasonable level of Inventory of parts from Appellant. Thus, it was submitted that the inventory of spares was maintained by LG India for itself, as the service provider, in order to comply with the obligation under the said agreement and not on behalf of the Appellant. Z. Clause 4 of the said agreement was also referred to show that it was obligatory upon LG India to maintain adequate facilities and organization in order to comply with the contractual duties. AA. Thereafter clause 7 at page 820 of the paper book volume 3 was referred to show that Appellant was to reimburse the amount of expenses of the Appellant along with certain markup to be decided by the parties from time to time. BB. Further it was pointed out that the said transaction was duly reported by LG India and pursuant to the directions of DRP, TPO had accepted the said transaction to be at arm's length. The said transaction was also duly reported by the Appellant at page 939 of the paper book vol - 3. CC. To sum up, it was submitted that in view of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here cannot be further attribution. He extensively referred to paragraph number 78 of the order of the honourable Delhi High Court in GE parts incorporation and stated that in fact it supports the argument of the assessee on the issue of the profit attribution. 80. The coordinate bench also drew attention of the parties to the decision of the honourable Delhi High Court in case of [2014] 364 ITR 336W (Del) CENTRICA INDIA OFFSHORE PVT. LTD. v. COMMISSIONER OF INCOME-TAX AND OTHERS specifically para no 36 of the order where in it is held as under :- 36. In this context, the decision of the Supreme Court in Morgan Stanley & Co. Inc. (supra) offers support for the Authority's viewpoint, rather than the contrary stance. In that case, the Court considered various forms of PEs, agency, service etc, each of which contemplate a different characteristic and link between the deputed employee/organization and the parent. In the context with which we are presently concerned, the following observations are critical: "15. As regards the question of deputation, we are of the view that an employee of MSCO when deputed to MSAS does not become an employee of MSAS. A deputationist has a lien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees were lent to the Indian entity to render service on behalf of the overseas employer. On these facts, it was held that the reimbursement of salary paid by the overseas entity to the seconded employee was "fees for technical services", liable to be taxed in India. The Court noted the OECD commentary on Article 15 of the model convention which states as under: "[t]he situation is different if the employee works exclusively for the enterprise in the state of employment and was released for the period in question by the enterprise in this state of residence." On the facts of that case, it was held that this clearly and critically not done. In the facts of the Appellant's case, on the other hand, it is clearly evident that the expatriate employees are working exclusively for LGEIL during the tenure of their secondment and have simultaneously is being released for the period in question by the Appellant. The ratio of the decision in Centrica's case (supra) therefore, supports the submissions of the Appellant. 82. We have carefully considered the rival contention and perused the orders of the lower authorities. It is interesting to note that there are 9 appeals pending before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit margin. Here the assessee has wisely decided to increase the quantum of its sale and to keep the margins at normal rates so that the same are not adjusted by the Transfer Pricing Officer and the Transfer Pricing Orders are without any additions on this account. 7. All these facts establish that assessee has business in India and not only business with India. 8. The visit of short-term expatriates is for the business motive of the parent only as has been discussed in detail in paras below. 9. The availability of fixed place for carrying out the business of the assessee is available to every long-term and short-term expatriate coming to India in the office factory premises of LGEIL. 10. The denial of the assessee to furnish the details of the visits made by short-term expatriates and the purposes of their visit indirectly reflect that they have come to India with the business motive and to enhance the business being carried out by the long-term expatriates seconded to India. 11. It has been clearly established below that the short-term expatriates are neither coming for shareholder's meet nor for technological purposes. 12. The assessee has not furnished any evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provision Article 5(1) and 5(2) of the IT Act, 1961. Therefore, assessee's contention that the statements, when read in their entirety give a conclusion contrary to the above is not acceptable. The assessee has further contended that the services performed by it are in the nature of stewardship activities in order to meet the contractual obligations in terms of Technical Assistance and Royalty Agreement with LGEIL. The discussion above clearly establishes that the type of control the parent company exercise over the Indian entity is such that it cannot be treated as that of a shareholder performing its stewardship activities. The Indian company is economically, technically and in term of human resources dependent on the assessee and is engaged in furthering the business interest of the parent company and the whole LG Group. The assessee's contention is, therefore, not acceptable. From the above discussion and keeping in view the whole business arrangements amongst the various entities of LG group, it has emerged that the seconded expatriates work for furthering the business interest of the whole LG group and the assessee is also an essential part of the same. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the provisions of paragraph (3), where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. " The Article provides for (i) Separate entity approach to the PE and (ii) arm's length price by use of the words "engaged in the same or similar activities under the same or similar conditions" The arm's length principle is regulated per Chapter-X of the Income Tax Act, 1961 and Income Tax Rules, 1962. PE has to be considered a separate and distinct entity different from its head office for attributing incomes there from. The definition of "enterprise" as in section 92F(iii) is to mean a person (including a permanent establishment of such person). This supports the above conclusion. Circular 14 (para 55.16) dated 12 December 2001 provides that trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied. The profits of the PE in this case are ascertainable by application of the methodology provided in TP Regulations. It may, therefore, be kindly appreciated that Rule 10 could possibly apply in following scenarios: where there is no tax treaty between India and respective foreign country; and, * where the foreign enterprise has a "business connection" in India; or In the instant case, the Assessing officer had determined the income attributable to PE by applying Rule 10 instead of applying a prescribed method. Having regard to the Article 7(2) of India-Japan tax treaty (separate and distinct entity approach), the Assessing Officer must determine the ALP by invoking the' transfer pricing methodology prescribed under the Act. This position is also in line with the principle laid down by Apex Court in case of DIT vs Morgan Stanley & Co. (292 ITR 416) and followed by Delhi High Court in case of Rolls Royce Singapore (P) Ltd. vs ADIT (202 Taxman 45). Rules 10B to Rule 10D flow directly from powers delegated under the provisions of the statute (sections 92C and 92B). Thus, basis above the income of the PE can be reasonably ascertained by imputing the costs in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in India for the relevant year or any other years and other grounds raised by the assessee or its associated enterprise in India viz. LG Electronics India private limited in various other proceedings in India. Thus this letter has been accepted by the learned dispute resolution panel and straightway went on to attribute the profit to the permanent establishment. 84. In the direction of the learned dispute resolution panel for assessment year 2008 - 09 there is also a reference to another letter submitted by the assessee dated 02/08/2017 which is placed at page number 14 of the order of the learned dispute resolution panel which states "This is with reference to the captioned matter which was heard by the honourable panel on 26/07/2017. As mentioned by the assessee during the course of hearing, it is submitted that in respect of preceding year (i.e. Assessment Year 2007 - 08), the assessee has not appeal before the honourable income tax appellate tribunal (ITAT) against the quantum of attribution arrived at by the learned assessing officer (AO) in the final order of assessment year 2007 - 08 based on the direction of the honourable DRP. Further the assessee submits that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned dispute resolution panel that the assessee has conceded the existence of the permanent establishment, we have refrained from giving our findings on the existence of the permanent establishment as it will prejudice the interest of the assessee to the extent that it will not be able to avail the benefit of the direction of the learned dispute resolution panel on the existence of the permanent establishment. In normal circumstances, as necessary facts are laid down before us, we would have decided the issue but the specific letters before the ld DRP, where DRP in its own understanding, rightly or wrongly, considered the concession by the assessee on this issue and has not directed the ld AO on its merit about the existence of PE. The Object of the incorporation of the provision of Dispute Resolution Panel is to 'resolve a dispute' by directing the ld AO on a specific issue. If that right of the assessee is not allowed to be exercised, then it may cause irreparable damage to the assessee. 88. In view of above facts, we set aside all the appeals of the assessee back to the file of the learned dispute resolution panel with a direction to first ascertain the fact about the admiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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