MICRO FOCUS SOFTWARE INC.,USA vs. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 3(2)(2), INTERNATIONAL TAXATION, MUMBAI, MUMBAI

ITA 4768/MUM/2023Status: DisposedITAT Mumbai06 September 2024AY 2021-22Bench: MS. KAVITHA RAJAGOPAL (Judicial Member), SMT. RENU JAUHRI (Accountant Member)1 pages
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What did the Tribunal hold?

The Tribunal held that the issue of DAPE is tax-neutral if the agent is remunerated at arm's length, and the transactions were found to be at arm's length price. Therefore, no further addition is warranted.

What were the facts?

The assessee, Micro Focus Software Inc. (USA), had a subsidiary in India, Micro Focus Software India Pvt. Ltd. (MFSIPL), which acted as a distributor. The Assessing Officer treated MFSIPL as a dependent agent permanent establishment (DAPE) and made an addition on account of software sales. The assessee challenged this order.

What were the issues?

Whether the Indian subsidiary constitutes a dependent agent permanent establishment (DAPE) and if so, whether any income attribution is necessary when the transactions are at arm's length.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(5),Section 270A,Section 234A,Section 234B

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Before: MS. KAVITHA RAJAGOPAL & SMT. RENU JAUHRI

For Appellant: Shri Ketan Ved
For Respondent: Shri Anil Sant
Hearing: 11.06.2024Pronounced: 06.09.2024

PER RENU JAUHRI [A.M.] :- This appeal has been filed by the assessee challenging the final assessment order dated 25.10.2023 passed by Deputy Commissioner of Income Tax (International Tax), Circle 3(2)(2), Mumbai u/s 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] in pursuance to the directions issued by the DRP vide order dated 27.07.2023 u/s 144C(5) of the Act for Assessment Year [A.Y.] 2021-22. A.Y. 2021-22 Micro Focus Software Inc.

2.

The assessee has raised following grounds of appeal: “1 That the o

The order continues below.

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