9911796707
TMI Blog2024 (8) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... blish by way of any documentary evidence that for A.Y. 2016-17, SanDisk India was acting on behalf of assessee in India in order to constitute a deemed permanent establishment under Article 5(4) of India-u/s. DTAA. Revenue has not brought any interrelated transaction between assessee and SanDisk India on record to establish that assessee and SanDisk India were associated enterprises during the financial year relevant to AY 2016-17. Therefore in our considered opinion, the observations of the AO in attributing 30% of business profits of SanDisk India in the hands of assessee for the year under consideration do not have any legs to stand in the eyes of law. Thus, SanDisk India cannot be held to be a dependent agency PE of assessee in India for the year under consideration and no addition could be made in the hands of assessee as FTS or any attribution of profits earned by SanDisk India could be made in the hands of assessee for the year under consideration as there is no relation or there do not exist any transaction that has been brought on record between assessee and SanDisk India. Decided in favour of assessee. - Smt. Beena Pillai, Judicial Member And Shri Laxmi Prasad Sahu, Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded any employee to SanDisk India during the said year and accordingly the question of receiving any reimbursement of salary of seconded employees does not arise. 3.3. The Ld. AO has erred in law and on facts, without applying the mind and without appreciating the facts submitted, in making an adjustment treating a non-existing reimbursement as fees for technical services. 4. Margin to be attributed 4.1. Without prejudice to the above grounds that the Appellant does not have a PE in India, the Ld. AO erred in facts and the Hon'ble Panel erred in upholding such action of attributing 30% of the sales to India as business income. 4.2. Without prejudice to the ground that the Assessee does not have a PE in India, the Ld. AO erred in not providing an opportunity of being heard before attributing 30% of the sales to India as business income. 5. Interest under sections 234A of the Act 5.1. The Ld. AO has erred in law and on facts in levying interest under section 234A of the Act. 5.2. Without prejudice to the above, the Ld. AO erred in considering October 31, 2016 as the due date for filing return of income and not November 30, 2016 for computing interest under section 234A of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SanDisk India creates an agency permanent establishment of assessee in India. 2.4 It is submitted that during the year under consideration, the SanDisk LLC, USA was in receipt of reimbursement from SanDisk India towards reimbursement of salary expenses of expats. The Ld.AO was of the opinion that, the marketing support team of SanDisk India creates a PE of assessee and treated the reimbursement of salary expenses of the seconded employees made by SanDisk India to SanDisk LLC, USA as FTS in the hands of the assessee. The Ld.AO also concluded that, as MSS activity performed by SanDisk India create a dependent Agency PE of the assessee and attributed 30% of the revenue from operations in India as business Income attributable to PE in India. Aggrieved by the draft assessment order, assessee filed objections before the DRP. 2.5 During the proceedings before the DRP, the assessee submitted that for the relevant year under consideration, assessee and SanDisk India were not even associated enterprises and that there was no marketing support services that was rendered by SanDisk India to the assessee. The assessee before DRP vehemently submitted that therefore the question of dependent age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee in India at the profit that was attributable at 30% and held it to be business income in the hands of the assessee in India. Aggrieved by the order of the Ld.AO, the assessee is in appeal before this Tribunal. 2.8 The arguments advanced by the Ld.AR are as under: A) The Ld.AR at the outset submitted that all the grounds raised in the present appeal are in respect of one single issue of considering SanDisk India to be a dependent agent PE of assessee in India for the year under consideration and thereby attributing 30% of the sales to India as business income in the hands of the assessee is beyond the scope of law envisaged under the statute. B) The Ld.AR submitted the assessing officer treated the reimbursement of salaries paid by SanDisk India to SanDisk LLC, USA for the year under consideration in respect of seconded employees as fee for technical services in the hands of the assessee even though the assessee was not even an AE to SanDisk India, or had any transaction with SanDisk India. He submitted that, the assessee acquired SanDisk LLC USA on 12.05.2016 and therefore any related party transaction took place between the assessee and SanDisk India started only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee during financial year 2015-16 relevant to AY under consideration is through SanDisk India and that the role of SanDisk India in the sale of assessee s products is vital. The Ld.AR also submitted that the assessing officer is wrong in concluding that SanDisk India had authority to conclude contract /deals on behalf of assessee and that the activities of SanDisk India were not limited only to sales support services. G) The Ld.AR referring to the remand report by the assessing officer submitted that, the factual observations noted therein are based on surmises and conjectures without any documentary evidence. He submitted that the Ld.AO has erred in observing that assessee is not able to distinguish between the sales made by assessee or SanDisk. He submitted that this observation is factually incorrect as assessee never had any transaction with SanDisk India or SanDisk LLC, USA during the year under consideration. The Ld.AR thus vehemently submitted that, additions made by the Ld.AO is without any basis and documentary support. 2.9 On the contrary, the L.DR relied on the orders passed by the authorities below and placed emphasis on the observations of the Ld.AO in the remand report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctuated through SanDisk India or that SanDisk India was involved in such sales for the year under consideration. It is therefore noted that for assessment year 2016-17 (the year under consideration), the revenue has failed to establish by way of documentary evidences, involvement of SanDisk India in providing sales and marketing services to assessee as alleged by them. 3.5 It is noted that based on the survey materials collected post the date of acquisition (12.05.2016), the revenue authorities cannot impute any relation between assessee and SanDisk India for the year under consideration being assessment year 2016-17 which is prior to the date of acquisition. It is noted that, the financials of the assessee as well as SanDisk India along with their respective TP study reports for A.Y. 2016-17 placed in the paper book speaks contrary to the factual observations of the Ld.AO in the remand report. 3.6 It is further surprising to note that, the addition made by the Ld.AO in the hands of assessee as FTS amounting to Rs. 3,66,94,537/- is the reimbursement of expat salary expenses paid by SanDisk India to SanDisk LLC for the period 01.04.2015 to 31.03.2016. The financial recording to that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
