DIT v. Morgan Stanley & Co.

292 ITR 416Supreme Court of India2007#210 most cited

What is DIT v. Morgan Stanley & Co. authority for?

A Permanent Establishment (PE) signifies a foreign enterprise's virtual projection into another country, with a fixed place PE existing where an MNE's business is wholly or partly carried on. A dependent agent PE requires the agent to act as such and/or have the authority to conclude contracts for the foreign enterprise under DTAA provisions.

360

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 2011 to 2026.

Also referred to as

DIT v. Morgan Stanley & Co. · Morgan Stanley PE · 292 ITR 416 · Permanent Establishment DTAA · fixed place PE · dependent agent PE · Article 5 India-USA DTAA · authority to conclude contracts PE · outsourcing MNE · service PE · agency PE

Sections most often in play

Section 143(3)Section 234BSection 144C(13)Section 234ASection 270ASection 9(1)(vi)Section 271(1)(c)Section 5
Read the full judgment

Issues it is cited on

dependent agent peinstallation peagency peservice pefixed place peuse of equipmentprofit split methodsection 44dfunctional analysisfar analysismake available clausesection 44bb

Judgments citing DIT v. Morgan Stanley & Co.

DCIT, International Taxation, Circle- 1(1)(1), New Delhi vs. Adobe Systems Software Ireland Ltd., Dublin, Ireland

In the result, appeals by the assessee stand allowed in terms of the above order and the Revenue’s appeal stand dismissed as above

ITA 5028/DEL/2017[2011-12]Status: DisposedITAT Delhi27 Jul 2022AY 2011-12

Bench: Shri Shamim Yahya & Shri Chandra Mohan Garg

Section 9(1)(vi)

…dia is legally dependent of Adobe Ireland that there is fixed place PE in India. It was further submitted that profit attribution to PE was to be sustained despite the decision of the Hon’ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007] 292 ITR 416 on the basis of reasoning of Ld. CIT(A) drawn from appeal for AY 2010-11. Without prejudice to the above submission, it was submitted that attribution of profit by applying the FAR analysis has not been accepted by the Indian Government and the attribution of profit has to be determined by applying the relevant provisions of the DTAA read with Ru…

DCIT, International Taxation, Circle- 1(1)(1), New Delhi vs. Adobe Systems Software Ireland Ltd., Dublin, Ireland

In the result, appeals by the assessee stand allowed in terms of the above order and the Revenue’s appeal stand dismissed as above

ITA 5027/DEL/2017[2010-11]Status: DisposedITAT Delhi27 Jul 2022AY 2010-11

Bench: Shri Shamim Yahya & Shri Chandra Mohan Garg

Section 9(1)(vi)

…dia is legally dependent of Adobe Ireland that there is fixed place PE in India. It was further submitted that profit attribution to PE was to be sustained despite the decision of the Hon’ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007] 292 ITR 416 on the basis of reasoning of Ld. CIT(A) drawn from appeal for AY 2010-11. Without prejudice to the above submission, it was submitted that attribution of profit by applying the FAR analysis has not been accepted by the Indian Government and the attribution of profit has to be determined by applying the relevant provisions of the DTAA read with Ru…

DCIT, Circle- 1(1)(1), International Taxation, New Delhi vs. Adobe Systems Software Ireland Ltd., New Delhi

In the result, appeals by the assessee stand allowed in terms of the above order and the Revenue’s appeal stand dismissed as above

ITA 5026/DEL/2017[2006-07]Status: DisposedITAT Delhi27 Jul 2022AY 2006-07

Bench: Shri Shamim Yahya & Shri Chandra Mohan Garg

Section 9(1)(vi)

…dia is legally dependent of Adobe Ireland that there is fixed place PE in India. It was further submitted that profit attribution to PE was to be sustained despite the decision of the Hon’ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007] 292 ITR 416 on the basis of reasoning of Ld. CIT(A) drawn from appeal for AY 2010-11. Without prejudice to the above submission, it was submitted that attribution of profit by applying the FAR analysis has not been accepted by the Indian Government and the attribution of profit has to be determined by applying the relevant provisions of the DTAA read with Ru…

DCIT, International Taxation, Circle- 1(1)(1), New Delhi vs. Adobe Systems Software Ireland Ltd., Dublin, Ireland

In the result, appeals by the assessee stand allowed in terms of the above order and the Revenue’s appeal stand dismissed as above

ITA 5025/DEL/2017[2005-06]Status: DisposedITAT Delhi27 Jul 2022AY 2005-06

Bench: Shri Shamim Yahya & Shri Chandra Mohan Garg

Section 9(1)(vi)

…dia is legally dependent of Adobe Ireland that there is fixed place PE in India. It was further submitted that profit attribution to PE was to be sustained despite the decision of the Hon’ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007] 292 ITR 416 on the basis of reasoning of Ld. CIT(A) drawn from appeal for AY 2010-11. Without prejudice to the above submission, it was submitted that attribution of profit by applying the FAR analysis has not been accepted by the Indian Government and the attribution of profit has to be determined by applying the relevant provisions of the DTAA read with Ru…

DCIT, International Taxation, Circle- 1(1)(1), New Delhi vs. Adobe Systems Software Ireland Ltd., Dublin, Ireland

In the result, appeals by the assessee stand allowed in terms of the above order and the Revenue’s appeal stand dismissed as above

ITA 5024/DEL/2017[2004-05]Status: DisposedITAT Delhi27 Jul 2022AY 2004-05

Bench: Shri Shamim Yahya & Shri Chandra Mohan Garg

Section 9(1)(vi)

…dia is legally dependent of Adobe Ireland that there is fixed place PE in India. It was further submitted that profit attribution to PE was to be sustained despite the decision of the Hon’ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007] 292 ITR 416 on the basis of reasoning of Ld. CIT(A) drawn from appeal for AY 2010-11. Without prejudice to the above submission, it was submitted that attribution of profit by applying the FAR analysis has not been accepted by the Indian Government and the attribution of profit has to be determined by applying the relevant provisions of the DTAA read with Ru…

Adobe Systems Software Ireland Ltd., Ireland vs. DCIT, Circle- 1(1)(1), International Taxation, New Delhi

In the result, appeals by the assessee stand allowed in terms of the above order and the Revenue’s appeal stand dismissed as above

ITA 4923/DEL/2017[2012-13]Status: DisposedITAT Delhi27 Jul 2022AY 2012-13

Bench: Shri Shamim Yahya & Shri Chandra Mohan Garg

Section 9(1)(vi)

…dia is legally dependent of Adobe Ireland that there is fixed place PE in India. It was further submitted that profit attribution to PE was to be sustained despite the decision of the Hon’ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007] 292 ITR 416 on the basis of reasoning of Ld. CIT(A) drawn from appeal for AY 2010-11. Without prejudice to the above submission, it was submitted that attribution of profit by applying the FAR analysis has not been accepted by the Indian Government and the attribution of profit has to be determined by applying the relevant provisions of the DTAA read with Ru…

Adobe Systems Software Ireland Ltd., Ireland vs. DCIT, Circle- 1(1)(1), International Taxation, New Delhi

In the result, appeals by the assessee stand allowed in terms of the above order and the Revenue’s appeal stand dismissed as above

ITA 4922/DEL/2017[2011-12]Status: DisposedITAT Delhi27 Jul 2022AY 2011-12

Bench: Shri Shamim Yahya & Shri Chandra Mohan Garg

Section 9(1)(vi)

…dia is legally dependent of Adobe Ireland that there is fixed place PE in India. It was further submitted that profit attribution to PE was to be sustained despite the decision of the Hon’ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007] 292 ITR 416 on the basis of reasoning of Ld. CIT(A) drawn from appeal for AY 2010-11. Without prejudice to the above submission, it was submitted that attribution of profit by applying the FAR analysis has not been accepted by the Indian Government and the attribution of profit has to be determined by applying the relevant provisions of the DTAA read with Ru…

Adobe Systems Software Ireland Ltd., Ireland vs. DCIT, Circle- 1(1)(1), International Taxation, New Delhi

In the result, appeals by the assessee stand allowed in terms of the above order and the Revenue’s appeal stand dismissed as above

ITA 4921/DEL/2017[2010-11]Status: DisposedITAT Delhi27 Jul 2022AY 2010-11

Bench: Shri Shamim Yahya & Shri Chandra Mohan Garg

Section 9(1)(vi)

…dia is legally dependent of Adobe Ireland that there is fixed place PE in India. It was further submitted that profit attribution to PE was to be sustained despite the decision of the Hon’ble Supreme Court in the case of DIT v. Morgan Stanley & Co. Inc [2007] 292 ITR 416 on the basis of reasoning of Ld. CIT(A) drawn from appeal for AY 2010-11. Without prejudice to the above submission, it was submitted that attribution of profit by applying the FAR analysis has not been accepted by the Indian Government and the attribution of profit has to be determined by applying the relevant provisions of the DTAA read with Ru…

DDIT (I.T) 2(1), Mumbai vs. M/S. Reuters Ltd., Mumbai

In the result, both the appeals filed by the Assessing Officer are dismissed, and both the appeals filed by the assessee are allowed in the limited terms indicated above

ITA 5025/MUM/2004[1999-2000]Status: DisposedITAT Mumbai05 Jul 2022AY 1999-2000
Section 143(3)

…he judgment, if the correct arm's length price is applied and paid then nothing further would be left to be taxed in the hands of the Foreign Enterprise. 13. Considering the above principle as may be discerned from the judgment in DIT (International Taxation) 292 ITR 416 (supra) it would be clear that— (1) Considering the CBDT Circular No. 742 it would be fair and reasonable that the taxable income is computed at 10 per cent of the gross profits. In the instant case insofar as marketing services are concerned by the arm's length principle what has been paid is more than 10 per cent as can be seen from the order o…

DDIT (I.T) 2(1), Mumbai vs. M/S. Reuters Ltd., Mumbai

In the result, both the appeals filed by the Assessing Officer are dismissed, and both the appeals filed by the assessee are allowed in the limited terms indicated above

ITA 5024/MUM/2004[1998-1999]Status: DisposedITAT Mumbai05 Jul 2022AY 1998-1999
Section 143(3)

…he judgment, if the correct arm's length price is applied and paid then nothing further would be left to be taxed in the hands of the Foreign Enterprise. 13. Considering the above principle as may be discerned from the judgment in DIT (International Taxation) 292 ITR 416 (supra) it would be clear that— (1) Considering the CBDT Circular No. 742 it would be fair and reasonable that the taxable income is computed at 10 per cent of the gross profits. In the instant case insofar as marketing services are concerned by the arm's length principle what has been paid is more than 10 per cent as can be seen from the order o…

Refinitiv Ltd., Mumbai vs. DCIT (I.T) 2(1), Mumbai

In the result, both the appeals filed by the Assessing Officer are dismissed, and both the appeals filed by the assessee are allowed in the limited terms indicated above

ITA 4997/MUM/2004[1999-2000]Status: DisposedITAT Mumbai05 Jul 2022AY 1999-2000
Section 143(3)

…he judgment, if the correct arm's length price is applied and paid then nothing further would be left to be taxed in the hands of the Foreign Enterprise. 13. Considering the above principle as may be discerned from the judgment in DIT (International Taxation) 292 ITR 416 (supra) it would be clear that— (1) Considering the CBDT Circular No. 742 it would be fair and reasonable that the taxable income is computed at 10 per cent of the gross profits. In the instant case insofar as marketing services are concerned by the arm's length principle what has been paid is more than 10 per cent as can be seen from the order o…

Refinitiv Ltd., Mumbai vs. DCIT (I.T) RG. 2, Mumbai

In the result, both the appeals filed by the Assessing Officer are dismissed, and both the appeals filed by the assessee are allowed in the limited terms indicated above

ITA 4996/MUM/2004[1998-1999]Status: DisposedITAT Mumbai05 Jul 2022AY 1998-1999
Section 143(3)

…he judgment, if the correct arm's length price is applied and paid then nothing further would be left to be taxed in the hands of the Foreign Enterprise. 13. Considering the above principle as may be discerned from the judgment in DIT (International Taxation) 292 ITR 416 (supra) it would be clear that— (1) Considering the CBDT Circular No. 742 it would be fair and reasonable that the taxable income is computed at 10 per cent of the gross profits. In the instant case insofar as marketing services are concerned by the arm's length principle what has been paid is more than 10 per cent as can be seen from the order o…

Micro Focus Software Inc. (Earlier Known As Novell Inc.), Usa vs. The Dy CIT (Intl. Taxation)-Circle-3(2)(2), Mumbai

In the result, the appeal is allowed in the terms indicated above

ITA 863/MUM/2021[2017-18]Status: DisposedITAT Mumbai30 May 2022AY 2017-18
Section 139(1)Section 143(3)Section 234A

…he judgment, if the correct arm's length price is applied and paid then nothing further would be left to be taxed in the hands of the Foreign Enterprise. 13. Considering the above principle as may be discerned from the judgment in DIT (International Taxation) 292 ITR 416 (supra) it would be clear that— (1) Considering the CBDT Circular No. 742 it would be fair and reasonable that the taxable income is computed at 10 per cent of the gross profits. In the instant case insofar as marketing services are concerned by the arm's length principle what has been paid is more than 10 per cent as can be seen from the order o…

DCIT (It)-4(1) (2), Mumbai vs. M/S. Taj Tv. Ltd, Mumbai

The appeals are dismissed

ITA 1718/MUM/2021[2014-15]Status: DisposedITAT Mumbai13 May 2022AY 2014-15

Bench: Shri M. Balaganesh & Shri Kuldip Singh

For Appellant: Shri Madhur Agarwal, A.R. &For Respondent: Shri Rajneesh Yadav, D.R

…n the decision of the ITAT in the assessee's case in earlier years without considering, that while the Hon'ble ITAT had decided the issue in favour of the assessee in earlier years by placing reliance on the Hon'ble Supreme Court's decision in Morgan Stanley [292 ITR 416], the case of the assessee is distinguishable on facts from the case of Morgan Stanley (supra). v. On the facts and circumstance of the case and in law, the Ld CIT (A) erred in not considering that the ratio of Morgan Stanley shall be applicable only when arm's length price has been determined for all the functions and risks undertaken by Taj In…

DCIT (It) -4(1) (2), Mumbai vs. M/S. Taj Tv Ltd, Mumbai

The appeals are dismissed

ITA 1717/MUM/2021[2016-17]Status: DisposedITAT Mumbai13 May 2022AY 2016-17

Bench: Shri M. Balaganesh & Shri Kuldip Singh

For Appellant: Shri Madhur Agarwal, A.R. &For Respondent: Shri Rajneesh Yadav, D.R

…n the decision of the ITAT in the assessee's case in earlier years without considering, that while the Hon'ble ITAT had decided the issue in favour of the assessee in earlier years by placing reliance on the Hon'ble Supreme Court's decision in Morgan Stanley [292 ITR 416], the case of the assessee is distinguishable on facts from the case of Morgan Stanley (supra). v. On the facts and circumstance of the case and in law, the Ld CIT (A) erred in not considering that the ratio of Morgan Stanley shall be applicable only when arm's length price has been determined for all the functions and risks undertaken by Taj In…

Taj Tv Ltd, Mumbai vs. DCIT (International Taxation -4(1) (2), Mumbai

The appeals are dismissed

ITA 1462/MUM/2021[2016-17]Status: DisposedITAT Mumbai13 May 2022AY 2016-17

Bench: Shri M. Balaganesh & Shri Kuldip Singh

For Appellant: Shri Madhur Agarwal, A.R. &For Respondent: Shri Rajneesh Yadav, D.R

…n the decision of the ITAT in the assessee's case in earlier years without considering, that while the Hon'ble ITAT had decided the issue in favour of the assessee in earlier years by placing reliance on the Hon'ble Supreme Court's decision in Morgan Stanley [292 ITR 416], the case of the assessee is distinguishable on facts from the case of Morgan Stanley (supra). v. On the facts and circumstance of the case and in law, the Ld CIT (A) erred in not considering that the ratio of Morgan Stanley shall be applicable only when arm's length price has been determined for all the functions and risks undertaken by Taj In…

Taj Tv Ltd, Mumbai vs. DCIT (International Taxation) -4 (1) (2), Mumbai

The appeals are dismissed

ITA 1461/MUM/2021[2015-16]Status: DisposedITAT Mumbai13 May 2022AY 2015-16

Bench: Shri M. Balaganesh & Shri Kuldip Singh

For Appellant: Shri Madhur Agarwal, A.R. &For Respondent: Shri Rajneesh Yadav, D.R

…n the decision of the ITAT in the assessee's case in earlier years without considering, that while the Hon'ble ITAT had decided the issue in favour of the assessee in earlier years by placing reliance on the Hon'ble Supreme Court's decision in Morgan Stanley [292 ITR 416], the case of the assessee is distinguishable on facts from the case of Morgan Stanley (supra). v. On the facts and circumstance of the case and in law, the Ld CIT (A) erred in not considering that the ratio of Morgan Stanley shall be applicable only when arm's length price has been determined for all the functions and risks undertaken by Taj In…

Taj Tv Ltd, Mauritius vs. DCIT (International Taxation)- 4 (1) (2), Mumbai

The appeals are dismissed

ITA 1460/MUM/2021[2014-15]Status: DisposedITAT Mumbai13 May 2022AY 2014-15

Bench: Shri M. Balaganesh & Shri Kuldip Singh

For Appellant: Shri Madhur Agarwal, A.R. &For Respondent: Shri Rajneesh Yadav, D.R

…n the decision of the ITAT in the assessee's case in earlier years without considering, that while the Hon'ble ITAT had decided the issue in favour of the assessee in earlier years by placing reliance on the Hon'ble Supreme Court's decision in Morgan Stanley [292 ITR 416], the case of the assessee is distinguishable on facts from the case of Morgan Stanley (supra). v. On the facts and circumstance of the case and in law, the Ld CIT (A) erred in not considering that the ratio of Morgan Stanley shall be applicable only when arm's length price has been determined for all the functions and risks undertaken by Taj In…

M/S. United Spirits Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-7(1)(1), Bengaluru

In the result, the appeal filed by the assessee is partly allowed

ITA 2701/BANG/2017[2013-14]Status: DisposedITAT Bangalore04 Apr 2022AY 2013-14

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am It(Tp)A No.2701/Bang/2017 : Asst.Year 2013-2014 M/S.United Spirits Limited The Deputy Commissioner Of Ub Towers, Income-Tax, Circle 7(1)(1) V. No.24 Vittal Mallya Road Bangalore. Bangalore – 560 001. Pan : Aaccm8043J. (Appellant) (Respondent) Appellant By : Sri.Percy Pardiwala, Senior Advocate Respondent By : Sri.Pradeep Kumar, Cit-Dr Date Of Pronouncement : 05.04.2022 Date Of Hearing : 24.03.2022 O R D E R Per George George K, Jm : This Appeal At The Instance Of The Assessee Is Directed Against Final Assessment Order Dated 12.10.2017 Passed U/S 143(3) R.W.S. 144C(13) Of The I.T.Act. The Relevant Assessment Year Is 2013-2014. 2. The Brief Facts Of The Case Are As Follows: The Assessee Is A Company Engaged In The Manufacture & Sale Of Alcoholic Beverage. The Assessee Filed Its Return Of Income For The Assessment Year 2013-2014 On 28.11.2013 Which Was Selected For Scrutiny Assessment. During The Course Of Assessment, The Assessee’S Case Was Also Referred To The Transfer Pricing Officer (Tpo). The Tpo Vide Order Dated 26.10.2016, Recommended Transfer Pricing Adjustments. The A.O., Thereafter, Passed A Draft Assessment Order Dated 30.12.2016. 2 It(Tp)A No.2701/Bang/2017 M/S.United Spirits Limited.

For Appellant: Sri.Percy Pardiwala, Senior AdvocateFor Respondent: Sri.Pradeep Kumar, CIT-DR
Section 143(3)Section 14ASection 234BSection 234CSection 36(1)(iii)

…al income principle fails here, since Chapter X brings in a legal fiction/deeming provision and the same is required to be complied with in order to arrive at the total income. As explained by Hon’ble Supreme Court in the case of DIT vs. Morgan Stanely & Co. (292 ITR 416), the object behind enactment of transfer pricing regulations is to prevent shifting of profits outside India. Hence, the interest free loan should be taken as a case of Zero interest and accordingly the impugned loan transactions should also be examined under arms’ length principles. 31. We notice that the decisions rendered by the Mumbai bench…

Ups Asia Group Pte Ltd., Mumbai vs. Asstt. CIT (International Taxation)-4(3)(1), Mumbai

In the result, appeal by the assessee is allowed in terms of our aforesaid findings

ITA 1220/MUM/2021[2017-18]Status: DisposedITAT Mumbai08 Mar 2022AY 2017-18

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Shri Nitesh JoshiFor Respondent: Shri Milind S. Chavan, Sr. AR
Section 143(3)Section 144CSection 144C(13)Section 9(1)(i)

…he judgment, if the correct arm's length price is applied and paid then nothing further would be left to be taxed in the hands of the Foreign Enterprise. 13. Considering the above principle as may be discerned from the judgment in DIT (International Taxation) 292 ITR 416 (supra) it would be clear that— (1) Considering the CBDT Circular No. 742 it would be fair and reasonable that the taxable income is computed at 10 per cent of the gross profits. In the instant case insofar as marketing services are concerned by the arm's length principle what has been paid is more than 10 per cent as can be seen from the order…