Once Issue Of Arm's Length Remuneration Settled By TPO, Question Of Ascertaining Existence Of PE Is Academic; Delhi High Court Quashes Reassessment Proceedings
9 months, 3 weeks ago

Once Issue Of Arm's Length Remuneration Settled By TPO, Question Of Ascertaining Existence Of PE Is Academic; Delhi High Court Quashes Reassessment Proceedings

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The Delhi High Court, while quashing the reassessment proceedings initiated by the income tax department against the Caterpillar Group, held that once the issue of arm's length remuneration was settled by the Transfer Pricing Officer, the question of ascertaining the existence of a permanent establishment was academic.The bench of Justice Yashwant Varma and Justice Purushaindra. The Delhi High Court, while quashing the reassessment proceedings initiated by the income tax department against the Caterpillar Group, held that once the issue of arm's length remuneration was settled by the Transfer Pricing Officer, the question of ascertaining the existence of a permanent establishment was academic. The bench of Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav has observed that the reassessment proceeding was initiated on the ground that the production unit of the wholly owned subsidiary constitutes a fixed place permanent establishment, service PE, and dependent agent permanent establishment. In fact, and as would be evident from a reading of the reasons set out for initiating action under Sections 147 and 148, the same were principally concerned with the Indian subsidiary performing functions and services for the petitioner,” the court said while quashing the reassessment proceedings.

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History of this topic

Transfer Pricing | Existence Of International Transaction Must Be Determined Before Benchmarking Analysis Is Commenced: Delhi HC
2 weeks, 4 days ago

Transfer Pricing | Existence Of International Transaction Must Be Determined Before Benchmarking Analysis Is Commenced: Delhi HC

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The Delhi High Court has held that before the Income Tax Department commences transfer pricing benchmarking analysis of an assessee's international transactions, the very existence of such 'international transaction' must be determined. A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar, while dealing with the case of an Indian entity producing liquor for brands like Jim Beam, observed, …

Survey Report On Existence Of 'Permanent Establishment' In Tax Year Not Relevant For Previous/Future AYs: Delhi HC Grants Relief To Swiss Co
2 weeks, 5 days ago

Survey Report On Existence Of 'Permanent Establishment' In Tax Year Not Relevant For Previous/Future AYs: Delhi HC Grants Relief To Swiss Co

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The Delhi High Court has held that the existence of a foreign entity's Permanent Establishment in India is required to be determined in law for each year separately on the basis of the scope, extent, nature and duration of activities in each year. A division bench of Justices Yashwant Varma and Ravinder Dudeja made the observation while dealing with a …

AO Becomes 'Functus Officio' After Closure Of Assessment, Must Put Relevant Incriminating Material To Assessee To Re-Confer Jurisdiction: Delhi HC
1 month ago

AO Becomes 'Functus Officio' After Closure Of Assessment, Must Put Relevant Incriminating Material To Assessee To Re-Confer Jurisdiction: Delhi HC

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The Delhi High Court has made it clear that after the closure of assessment proceedings, the Assessing Officer becomes 'functus officio' and to re-confer jurisdiction upon the AO to initiate re-assessment proceedings, relevant incriminating material ought to be put to the assessee. A division bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela made the observation while …

TPO's Role Is To Determine ALP Of International Transactions, Can't Act As AO To Probe Legitimacy Of Such Transactions: Delhi High Court
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1 month, 1 week ago

TPO's Role Is To Determine ALP Of International Transactions, Can't Act As AO To Probe Legitimacy Of Such Transactions: Delhi High Court

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The Delhi High Court has made it clear that the role of a Transfer Pricing Officer is to conduct a transfer pricing analysis and determine the arm's length price of an assessee's international transaction and the TPO cannot act as an Assessing Officer to probe the legitimacy of such transactions. The question whether any expenditure has been incurred by the …

ALP Not Concerned With Commercial Expediency Of International Transaction, Assessee Reporting Loss Not Grounds To Deem ALP Nil: Delhi HC
1 month, 1 week ago

ALP Not Concerned With Commercial Expediency Of International Transaction, Assessee Reporting Loss Not Grounds To Deem ALP Nil: Delhi HC

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The Delhi High Court has held that a Transfer Pricing Officer cannot compute the arm's length price of an assessee's international transactions as nil, merely because despite the services availed from such transactions, the assessee incurred a loss in business. It held, “The question whether the activities conducted by the Assessee ultimately resulted in a profit or loss, is not …

Transfer Pricing | Resolution Under Mutual Agreement Procedure Is By Consensus, Cannot Be Imposed Upon Assessee: Delhi HC
1 month, 1 week ago

Transfer Pricing | Resolution Under Mutual Agreement Procedure Is By Consensus, Cannot Be Imposed Upon Assessee: Delhi HC

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The Delhi High Court has made it clear that a dispute with respect to arm's length price in a transfer pricing can be resolved under Mutual Agreement Procedure only by consent and negotiations between contracting parties. Thus, the question before the Court was whether it is apposite to use the framework agreed by competent authorities of the US and India …

Whether Entity Is 'Permanent Establishment' Is A Fact-Specific Issue, Must Be Examined Separately For Different Tax Periods: Delhi High Court
2 months, 1 week ago

Whether Entity Is 'Permanent Establishment' Is A Fact-Specific Issue, Must Be Examined Separately For Different Tax Periods: Delhi High Court

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The Delhi High Court has held that whether an entity is a Permanent Establishment of a foreign company or not is a “fact-specific” issue which must be examined separately for different tax periods. A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar observed, “The position of a PE being a facts-specific issue and thus liable to be examined …

Transfer Pricing-Assessee's Objections On 'Functional Dissimilarity' Not Adjudicated: Delhi HC Asks TPO To Determine Comparable Entity Afresh
4 months ago

Transfer Pricing-Assessee's Objections On 'Functional Dissimilarity' Not Adjudicated: Delhi HC Asks TPO To Determine Comparable Entity Afresh

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The Delhi High Court recently directed a Transfer Pricing Officer to determine afresh the inclusion of a comparable entity with respect to an assessee, this time taking into consideration the latter's objections on 'functional dissimilarity' of the two. A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma ruled, “Assessee's contention that E4e Healthcare is functionally dissimilar to the …

Indian-Subsidiary Which Is Compensated At Arm's Length Can't Be Construed As Dependent Agent PE: Delhi High Court
6 months, 2 weeks ago

Indian-Subsidiary Which Is Compensated At Arm's Length Can't Be Construed As Dependent Agent PE: Delhi High Court

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Finding that subsidiary company is only undertaking marketing enterprise, whereas contracts are finalized and signed by the assessee outside India, the Delhi High Court held that KIPL cannot be said to be habitually securing and concluding order on behalf of assessee, and hence it is not Dependent Agent PE of Assessee. The Division Bench comprising Justice Yashwant Varma and Justice …

Direct Tax Weekly Round-Up: 21 To 27 July 2024
7 months, 3 weeks ago

Direct Tax Weekly Round-Up: 21 To 27 July 2024

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Supreme Court State Not Liable To Collect Tax At Source While Giving Contractors Permit To Vend Liquor At Fixed Retail Price : Supreme Court Case Details : THE EXCISE COMMISSIONER KARNATAKA & ANR. Services Provided Outside To Indian Customers In Connection With Right To Use Of Process Can't Be Taxed : Delhi High Court Case Title: The Commissioner Of Income …

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