THE COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION-2 vs. MITSUI & COMPANY LTD.
What did the High Court hold?
The High Court held that the first two substantial questions of law did not arise for consideration. This was because a predecessor Division Bench of the same Court, in ITA 902/2009 decided on 12th October, 2017, had already considered the survey report and held that the Liaison Office of the assessee did not constitute a Permanent Establishment (PE). Regarding the third substantial question of law, the Court found that both the CIT(A) and ITAT had reached concurrent findings of fact that MIPL was not performing additional functions and, in the absence of material, could not be considered a dependent agency PE liable to tax in India. Since this finding was not challenged on the ground of perversity, the third substantial question of law also did not arise for consideration. Consequently, no substantial question of law arose, and the appeal was dismissed.
What were the facts?
The appeal was filed by the Commissioner of Income Tax – International Taxation-2 (the Revenue) against an order of the Income Tax Appellate Tribunal (ITAT). The assessment year(s) are not explicitly stated. The dispute concerns whether the Liaison Office of Mitsui & Company Ltd. (the assessee) constituted a Permanent Establishment (PE) in India, and consequently, whether any income was attributable to India. The Revenue challenged the ITAT's finding that the Liaison Office was not a PE and that no income was attributable to India, even if considered a Dependent Agency PE. The High Court noted a previous decision of its own Division Bench in ITA 902/2009 concerning the same assessee, which had held that the Liaison Office did not constitute a PE.
What were the issues?
The Tribunal had to decide the following substantial questions of law raised by the Revenue: 1. Whether the ITAT erred in holding that the assessee's Liaison Office did not constitute a Permanent Establishment (PE) liable to tax in India, given that it was a fixed place and its activities were not preparatory or auxiliary in nature (under which provision of the Income Tax Act is not specified)? 2. Whether the ITAT/CIT(A) erred in holding that the Liaison Office does not constitute a PE (under which provision of the Income Tax Act is not specified)? 3. Whether the ITAT/CIT(A) erred in holding that no income is liable to be attributed in India, even if MIPL is taken as a Dependent Agency PE to the assessee in India (under which provision of the Income Tax Act is not specified)? Contentions: Assessee: Not recorded. Revenue: Argued that the Liaison Office was a fixed place and its activities were not preparatory or auxiliary, thus constituting a PE. Also argued that MIPL could be considered a Dependent Agency PE.
AI-generated summary — verify with the full judgment below
$~1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 321/2018 THE COMMISSIONER OF INCOME TAX – INTERNATIONAL TAXATION-2 ..... Appellant Through: Mr. Ruchir Bhatia, Advocate versus MITSUI & COMPANY LTD. ..... Respondent Through: Mr. Ved Jain, Advocate. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA O R D E R % 09.11.2022 In the present appeal, the following substantial questions of law have been raised by the appellant-Revenue:- 1. Whether on the facts and circumstances of the case and in law, whether the ITAT erred in holding that Liaison Office of the assessee did not constitute a permanent Establishment, liable to tax in India when the said office was clearly a fixed place and the activities carried out, could not be said to be preparatory or auxiliary in nature? 2. Whether ITAT/CIT(A) erred in holding that the Liaison office does not constitute PE? 3. Whether ITAT/CIT(A) erred in holding that no income is liable to attributable in India even MIPL is taken as Dependent Agency PE to the assessee in India? This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/06/2026 at 02:07:59
Admittedly, the learned predecessor Division Bench of this Court in the case of the respondent-assessee itself in ITA 902/2009 decided on 12th October, 2017 after considering the survey report held that the Liaison office of the assessee did not constitute a Permanent Establishment (for short ‘PE’). Consequently, the first two substantial questions of law do not arise for consideration in the present appeal. As far as the third substantial question of law is concerned, this Court finds that both CIT(A) and ITAT have given concurrent findings of fact that MIPL is not performing additional function and in absence of material, it cannot be taken as dependant agency PE to the assessee liable to tax in India. Since the said finding has not been challenged on the ground of perversity, even the third substantial question of law does not arise for consideration. Accordingly, no substantial question of law arises for consideration in the present appeal and the same is dismissed. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J NOVEMBER 9, 2022 js This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/06/2026 at 02:07:59
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