9911796707
TMI Blog2024 (8) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... ation alone. 3. The case of assessee is that Adobe Systems Software Ireland Limited ("Appellant" or "ADIR") is a company incorporated under the laws of Ireland and is a tax resident of Ireland in accordance with the Double Taxation Avoidance Agreement ("DTAA" or "tax treaty") between India and Ireland. Therefore, it is entitled to the beneficial provisions of the India-Ireland DTAA. During the year under consideration, ADIR was a wholly owned subsidiary of Adobe Software Trading Company Limited ("ASTCL"). Adobe Systems Incorporated ("Adobe USA") was the ultimate parent company of ADIR. Adobe USA has a subsidiary in India known as Adobe Systems India Private Limited ("Adobe India") that provides marketing support services to ADIR. ADIR is primarily engaged in the distribution/supply of shrink-wrapped/off-the- shelf/electronically downloadable/ subscription-based computer software and services ("Adobe products") outside of North America, including India. During the year under consideration, it purchased the software from third-party turnkey manufacturers/ASTCL and supplied the Adobe products its non-exclusive Indian distributors/resellers/end-customers on a principal-to-principal ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income (in Rs.) Tax as per India-Ireland DTAA (in Rs.) 1 Income in the nature of fees for technical services 49,02,10,818 4,90,21,082 2 Interest on income-tax refund 16,26,89,778 1,62,68,978 Total 65,29,00,596 6,52,90,060 3.2 Assessee claims that the transaction entered by the Appellant with Adobe India has always been accepted at Arm's Length Price ("ALP") by the preceding transfer pricing officers so the case of the Appellant for the year under consideration was consciously not referred to the transfer pricing officer by the Ld. AO. 3.3 During the course of assessment proceedings, the Assistant Commissioner of Income-tax, Circle 1(1)(1), International Taxation, New Delhi ("Ld. AO") had asked the Appellant to show cause as to why the assessment may not be completed on similar lines as earlier years wherein it was held that the Appellant has a permanent establishment ("PE") in India. 3.4 Thereafter, the Ld. AO had passed a draft assessment order dated December 30, 2022 ("impugned order") under section 144C of the Act, wherein it was alleged for the very first time that the Appellant is a conduit entity which is not entitled to the benefits under India-Irel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge in the facts of the instant case . 5. Now what comes up is that the issue of existence of PE is fully and squarely covered by the order of the Co-ordinate Bench where vide a common order dated July 27, 2022 for AY 2010-11 to AY 2015-16 in ITA No. 4921 to 4923/DEL/2017 and others, the coordinate Bench has deleted the additions made by the Ld. AO. It has been held that no addition had been proposed by the Ld. Transfer Pricing Officer in the case of Adobe India with respect to marketing support services. In such circumstances, further attribution of profits to the alleged PE i.e. Adobe India will be contrary to the settled position of law as laid down by the Hon'ble Apex Court in the case of Morgan Stanley and E-Funds. Relevant findings are reproduced below :- "12. We find the above view of the Ld. CIT(A) is not sustainable in the light of the decision of the Hon'ble Supreme Court as above in the case of DIT vs Morgan Stanley & Co.(supra). To the same effect is the order of the ADIT v. E-Funds IT Solution Inc.[2017] 399 ITR 34(SC), Honda Motor Co. Ltd vs. ADIT (301 CTR 601)(SC) and of the Hon'ble Delhi High Court in the case of Adobe Systems Inc. v. ADIT [WP(C) 2384, 2385, 2390 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the team Adobe Ireland. Thus, from the above, it is apparent that only on hypothesis and guess work and assigning of all sorts of imaginary motives by a few e-mails, the Ld. CIT(A) and therefore the Revenue is contending that the functions performed by Adobe India are much wider than the that as per the agreement and the transfer pricing analysis. We find that as discussed by us hereinabove these submissions are not at all cogent enough to warrant a view that the transfer pricing analysing done in the case of Adobe India does not adequately reflects functions performed and the risk assumed by the enterprise. In such a situation as held by Hon'ble Apex Court as above, there is no need to attribute any further profit as all functions and risk have been considered in the computation of Arm's Length Price in the case of Adobe India. 17. As such, it follows that the finding of PE is also without cogent basis. Be that as it may issue of PE becomes academic and we are not engaging further into it. We have already found that functions performed by Adobe India are actually not different than the agreement and transfer pricing documentation." 5.2 The aforesaid order has also been fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os. 5024/Del/2017 and Ors., dated 27.07.2022 has held that when the transaction between the assessee and its Indian AE is found to be at arm's length, no further attribution of profit can be made to the dependent agent PE in India. While considering identical issue in assessee's own case for assessment year 2017-18, the Tribunal in ITA No.774/Del/222, dated 21.10.2022 followed its earlier decision and held as under:.... 11. As discussed earlier, the factual position in the impugned assessment years are identical to past assessment years wherein the Tribunal has decided the issue. This is further evident from the fact that both the Assessing Officer and learned DRP have relied upon their earlier decisions while deciding the issue. That being the case, in our considered opinion, the issue relating to taxability of the Revenue earned from supply of software and automated services stands squarely covered in favour of the assessee by the earlier decisions of the Tribunal, referred to above. 13. Thus, respectfully following the decisions of the Coordinate Bench in assessee's own case, as discussed above, as well as the ratio laid down by the Hon'ble Supreme Court in the decision ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
