Salesforce.com secures nil tax withholding certificate as Indian affiliate fails permanent establishment test under Section 197(1)

HC set aside AO's order and directed issuance of nil withholding tax certificate under Section 197(1). Court found insufficient evidence to establish that SFDC India constituted petitioner's Permanent Establishment (PE) in India. The Reseller Agreement explicitly denied SFDC India authority to bind petitioner contractually. AO's conclusions regarding SFDC India's role in price determination and contract execution lacked substantial foundation. While SFDC India operated as petitioner's affiliate, transactions would be benchmarked at arm's length. Court emphasized order's scope limited to Section 197(1) certificate issuance, preserving AO's right to conduct future assessment uninfluenced by this ruling. .....

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