“service PE”

International TaxDTAA Article 5DTAA Article 5225 judgments

The decision most relied on for service PE is DIT v. Morgan Stanley & Co. (292 ITR 416), cited in 360 judgments on BharatTax.

Leading authorities on service PE

DIT v. Morgan Stanley & Co.

292 ITR 416 · 2007 · Supreme Court

360

citing judgments

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.

DIT v. Nokia Networks OY

358 ITR 259 · 2013 · High Court

276

citing judgments

Payments for the supply of software along with telecom equipment are not in the nature of royalty if they are for the use of a copyrighted article, not the copyright itself. Such payments are not taxable in India in the absence of a Permanent Establishment (PE).

National Petroleum Construction Company v. DIT

383 ITR 648 · 2016 · High Court

citing judgments

An Indian agent providing marketing services, without the authority to conclude contracts on behalf of a foreign company, does not constitute a Dependent Agent Permanent Establishment (DAPE) for the foreign company in India under DTAA provisions.

DIT v. E-Funds IT Solution

364 ITR 256 · 2014 · High Court

citing judgments

A subsidiary is an independent legal entity, and the mere relationship of holding-subsidiary or control by itself does not result in a Permanent Establishment (PE) for the foreign company in India, whether it be a fixed place PE or a dependent agent PE, even when the subsidiary provides outsourced services.

CIT(A) v. Eon Technology Pvt. Ltd.

343 ITR 366 · 2012 · High Court

citing judgments

Payments to a non-resident agent for services rendered outside India, where the agent has no permanent establishment (PE) or business connection in India, are not chargeable to tax in India. Consequently, there is no obligation to deduct tax at source under Section 195, and no disallowance under Section 40(a)(i) can be made.

Delmas France v. Asstt. DIT (IT)

17 Taxmann.com 91 · 2012 · ITAT

citing judgments

The ITAT evaluates the profit neutrality theory for a Dependent Agent Permanent Establishment (DAPE), stating that unlike a service PE, a DAPE assumes entrepreneurship risk which must be considered for arm's length remuneration.

DIT v. HCL Infosystems Ltd.

144 Taxmann 492 · 2005 · High Court

citing judgments

Reimbursement of salary costs of employees is not taxable as Fees for Technical Services (FTS) under the Act. Additionally, for a fixed place Permanent Establishment (PE) or place of management to exist, business premises must be made available or a right to use them must be established.

Galileo International Inc. v. DCIT

116 ITD 1 · 2009 · ITAT

citing judgments

Income is chargeable to tax in India only to the extent it is reasonably attributable to operations carried out in India, especially when the amounts paid to associated enterprises are at arm's length.

Judgments citing service PE

M/S. Biesse Manufacturing Company Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-1(1)(1), Bengaluru

In the result, the appeal of the assessee is partly allowed

ITA 338/BANG/2021[2016-17]Status: DisposedITAT Bangalore31 Oct 2022AY 2016-17

Bench: Shri George George K. & Ms. Padmavathy S

For Appellant: Shri, Tata Krishna, AdvocateFor Respondent: Shri Sankar K. Ganeshan, CIT(DR)(ITAT), Bengaluru

Section 143(2)Section 143(3)Section 234ASection 234BSection 92C

view of the existence of Service Permanent establishment (PE) in India and hence liable for tax withholding. Overturning the view of the AAR that Service PE was constituted, the Hon'ble High Court held that the payment to AE was in the nature of `fees for technical services ... observations of the Hon’ble Supreme Court in the case of Morgan Stanley (supra) were in the context of existence of service PE. This is clear from a reading of the relevant portion of the judgment of the Hon’ble Supreme Court, which is as follows:- “As regards the question

DCIT - 8(2)(1), Mumbai vs. Siemens Technology and Services Pvt. Ltd., Mumbai

In the result, the appeals of the revenue are dismissed and appeal of the assessee is partly allowed

ITA 3247/MUM/2018[2005-06]Status: DisposedITAT Mumbai12 Oct 2022AY 2005-06

Bench: Shri Kuldip Singh & Shri Amarjit Singh

For Appellant: P.J. Pardiwala &For Respondent: Ashok Kumar Kardam

Section 10ASection 143(2)Section 143(3)

3032 & 3247, 2947/Mum/2018 1 DCIT-8(2)(1) Vs. M/s Siemens Technology and Services Pvt. Ltd. IN THE INCOME TAX

DCIT - 8(2)(1), Mumbai vs. Siemens Technology & Services Pvt. Ltd., Mumbai

In the result, the appeals of the revenue are dismissed and appeal of the assessee is partly allowed

ITA 3032/MUM/2018[2006-07]Status: DisposedITAT Mumbai12 Oct 2022AY 2006-07

Bench: Shri Kuldip Singh & Shri Amarjit Singh

For Appellant: P.J. Pardiwala &For Respondent: Ashok Kumar Kardam

Section 10ASection 143(2)Section 143(3)

3032 & 3247, 2947/Mum/2018 1 DCIT-8(2)(1) Vs. M/s Siemens Technology and Services Pvt. Ltd. IN THE INCOME TAX

Siemens Technology & Services Pvt. Ltd.(Erstwhile Known As Siemens Information Systems Ltd.), Mumbai vs. DCIT- Circle -8(2)(1), Mumbai

In the result, the appeals of the revenue are dismissed and appeal of the assessee is partly allowed

ITA 2947/MUM/2018[2006-07]Status: DisposedITAT Mumbai12 Oct 2022AY 2006-07

Bench: Shri Kuldip Singh & Shri Amarjit Singh

For Appellant: P.J. Pardiwala &For Respondent: Ashok Kumar Kardam

Section 10ASection 143(2)Section 143(3)

3032 & 3247, 2947/Mum/2018 1 DCIT-8(2)(1) Vs. M/s Siemens Technology and Services Pvt. Ltd. IN THE INCOME TAX

Mfe Formwork Technology Sdn Bhd, Mumbai vs. The CIT (Intl Tax), Mumbai

In the result, the appeal is allowed

ITA 890/MUM/2022[2017-18]Status: DisposedITAT Mumbai30 Aug 2022AY 2017-18

Section 143(3)Section 263

amount of income attributable to such PE. It was ruled that MSAS should be regarded as constituting a service PE under Article 5(2)(1). On the second question the AAR ruled that the transactional net margin method (TNMM) was the most appropriate method for the determination ... would fall under Article 5(2)(1). Dealing with the question of deputation, the Court held that on the facts that there is a service PE under Article 5(2)(1) and as such held that the Department was right in its contention that there exists a PE in India

Toyota Boshoku Automotive India Private Limited, Ramanagaram vs. The Assistant Commissioner of Income Tax, Ltu, Circle-2, Bangalore

In the result, the appeal of the assessee is allowed

ITA 362/BANG/2021[2016-17]Status: DisposedITAT Bangalore18 Jul 2022AY 2016-17

Bench: Shri N.V Vasudevan, Hon’Ble & Shri Laxmi Prasad Sahu

For Appellant: Ms. Hirali Desai, ARFor Respondent: Shri Pradeep Kumar, CIT (DR)

Section 92D

Epson India Private Limited, Ulsoor vs. Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore

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

ITA 206/BANG/2021[2016-17]Status: DisposedITAT Bangalore14 Jul 2022AY 2016-17

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(Tp)A No. 206/Bang/2021 Assessment Year : 2016-17 M/S. Epson India Pvt. Ltd., The Deputy 12Th Floor, The Milenia, Commissioner Of Tower A, Income Tax, No. 1,Murphy Road, Circle 2 (1)(1), Ulsoor, Vs. Bangalore. Bangalore – 560 008. Pan: Aaace7858F Appellant Respondent : Shri Padamchand Khincha, Assessee By Ca : Dr. Manjunath Karkihalli, Revenue By Cit Dr Date Of Hearing : 15-06-2022 Date Of Pronouncement : 14-07-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against The Final Assessment Order Dated 25/03/2021 Passed By National E-Assessment Centre, Delhi For A.Y. 2016-17 On Following Grounds Of Appeal: “General Ground 1. The Orders Passed By Learned Additional / Joint / Deputy / Assistant Commissioner Of Income Tax / Income- Tax Officer, National E-Assessment Centre (Hereinafter Referred As "Ao" For Brevity), Learned Deputy Commissioner Of Income Tax (Tp) — 1(2)(1), Bangalore (Hereinafter Referred As "Tpo" For Brevity) & The Honourable Drp-1

For Respondent: Shri Padamchand Khincha

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL

M/S Kennametal Inc, United States of America vs. Deputy Commissioner of Income Tax (International Taxation) Circle-1(2), Bangalore

In the result, the appeal for AY 2014-15 is treated as allowed for statistical purpose while the appeal for AY 2012-13

ITA 1658/BANG/2017[2014-15]Status: DisposedITAT Bangalore13 Jul 2022AY 2014-15

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year: 2014-15

For Appellant: Shri K.R. Vasudevan &For Respondent: Shri Dilip, Standing Counsel for Dept

Section 143(3)

learned AO") and the learned DRP have erred in not adjudicating on the contention raised by the Appellant that if the secondment arrangement constitutes service PE, then the reimbursement of Salary cost needs to be examined under Article 7 of the DTAA related to "Business Profits" and not under Article ... case of Centrica is misplaced, as the facts of that case are different and the decision was rendered in the context of a service PE. iv) The decision of Centrica has been distinguished by the Hon'ble Karnataka High Court in the case of M/s Abbey Business Services India

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)

India. We have already noticed that transmission of RL is falls ünder Article 7 of Indo UK treaty. Since, they do not have service PE in India as per the Coordinate Bench decision in RL case (ITA No: 7895/Mum/2011 – Reuters Ltd. dated 28.08.2015). 47. In our view ... amount of income attributable to such PE. It was ruled that MSAS should be regarded as constituting a service PE under Article 5(2)(1). On the second question the AAR ruled that the transactional net margin method (TNMM) was the most appropriate method for the determination

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)

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)

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)

ITO, (It)-2(2)(2), Mumbai vs. M/S International Reinsurance and Insurance Consultancy & Broking Services Private Limited, Mumbai

In the result, the appeal filed by the revenue stands dismissed

ITA 2823/MUM/2019[2016-17]Status: DisposedITAT Mumbai13 Jun 2022AY 2016-17

Bench: Shri Amit Shukla, Jm & Shri Amarjit Singh, Am आयकरअपीलसं./ I.T.A. No. 2823/Mum/2019 (निर्धारणवर्ा / Assessment Year: 2016-17) M/S International Ito(It)-2(2)(2), Reinsurance & R. No. 1725, 17Th Floor, Air Insurance Consultancy India Building, Nariman & Broking Services Pvt. Point, बिधम/ Ltd. Mumbai-400 021 Vs. 15Th Floor, B-Wing, Nirmal Building, 241/242, Nariman Point, Mumbai-400 021 स्थायीलेखासं./जीआइआरसं./ Pan No. Aaaci2859J (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant By : Shri Milind Chavan, Ld. Dr प्रत्यथीकीओरसे/Respondent By : Shri Atul T. Suraiya, Ld. Ar सुनवाईकीतारीख/ : 12.05.2022 Date Of Hearing घोषणाकीतारीख / : 13.06.2022 Date Of Pronouncement आदेश / O R D E R Per Amit Shukla: The Aforesaid Appeal Has Been Filed By The Revenue Against The Impugned Order Dated 28.02.2019 Passed By Ld. Cit (Appeals)-56

For Appellant: Shri Milind Chavan, LdFor Respondent: Shri Atul T. Suraiya, Ld

Section 195Section 201Section 201(1)

India. As borne from the record, only in the case of one such NRR Swiss Re, AO has treated that it had a service PE and accordingly certificate u/s 197 12 I.T.A. No. 2823/Mum/2019 M/s International Reinsurance and Insurance Consultancy & Broking Services Pvt. Ltd. was obtained which was filed

M/S. Madura Coats Private Limited, Bangalore vs. Deputy Commissioner of Income Tax., (International Transaction), Circle- 1(2), Bangalore

In the result, appeals filed by assessee for A

ITA 1345/BANG/2019[2017-18]Status: DisposedITAT Bangalore31 May 2022AY 2017-18

Bench: Smt. Beena Pillai & Ms. Padmavathy Sit(It)A Nos. 1344 & 1345/Bang/2019 Assessment Years : 2016-17 & 2017-18 M/S. Madura Coats Pvt. The Deputy Ltd., Commissioner Of 7Th Floor, Jupiter Income Tax Prestige Technology (International Park, Vs. Taxation), Outer Ring Road, Circle – 1(2), Bangalore – 560 103. Bangalore. Pan: Aabcm8297K Appellant Respondent Assessee By : Shri Ajay Rotti, Ca : Shri Shehnawaz Ul Rahaman, Revenue By Addl. Cit (Dr) Date Of Hearing : 13-04-2022 Date Of Pronouncement : 31-05-2022 Order Per Beena Pillaipresent Appeals Are Filed By Assessee Against Order Dated 30.03.2019 Passed By Ld.Cit(A)-12, Bangalore For A.Ys. 2016-17 & 2017-18. It Is Submitted That The Issues Alleged By Assessee In Both These Years Are Identical & On Similar Facts. 2. Brief Facts Of The Case Are As Under: 2.1 Madura Coats Pvt Ltd (Mcpl) Is An Indian Company Carrying On The Business As Manufacturer & Merchant Of Sewing Threads & Other Goods, Possesses The Requisite Expertise & Experience By Virtue Of Having Several Qualified Personnel In Its Employment. During The Course Of Verification Conducted Us

For Appellant: Shri Ajay Rotti, CA

Section 195Section 201(1)

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND MS. PADMAVATHY S, ACCOUNTANT

M/S. Madura Coats Private Limited, Bangalore vs. Deputy Commissioner of Income Tax., (International Transaction), Circle- 1(2), Bangalore

In the result, appeals filed by assessee for A

ITA 1344/BANG/2019[2016-17]Status: DisposedITAT Bangalore31 May 2022AY 2016-17

For Appellant: Shri Ajay Rotti, CA

Section 195Section 201(1)

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND MS. PADMAVATHY S, ACCOUNTANT

M/S Tejas Networks Limited, Bangalore vs. Assistant Commissioner of Income Tax Central Circle-2(1), Bangalore

In the result, the appeals filed by the assessee are partly allowed

ITA 205/BANG/2018[2013-14]Status: DisposedITAT Bangalore31 May 2022AY 2013-14

Bench: Shri Chandra Poojari, Am & Shri George George K, Jm It(Tp)A No.764/Bang/2017 : Asst.Year 2012-2013 It(Tp)A No.205/Bang/2018 : Asst.Year 2013-2014 M/S.Tejas Networks Limited The Assistant Commissioner Plot No.25, Jp Software Park Of Income-Tax, Circle – 1, Ltu V. Bangalore. Electronic City Phase-I Hosur Road, Bangalore – 560 100. Pan : Aabct1670M. (Appellant) (Respondent) Appellant By : Sri.S.Annamalai, Advocate Respondent By : Sri.Sumer Singh Meena, Cit-Dr Date Of Pronouncement : 31.05.2022 Date Of Hearing : 19.05.2022 O R D E R Per George George K, Jm : These Appeals At The Instance Of The Assessee Are Directed Against Final Assessment Orders Dated 31.01.2017 & 23.11.2017, Passed U/S 143(3) R.W.S. 144C Of The I.T.Act. The Relevant Assessment Years Are 2012-2013 & 2013- 2014. We Shall First Adjudicate It(Tp)A No.764/Bang/2017 Pertaining To The Assessment Year 2012-2013. It(Tp)A No.764/Bang/2017 (Asst.Year 2012-2013) 2. The Brief Facts Of The Case Are As Follows: The Assessee Is A Company Engaged In The Business Of Design, Development, Manufacture Of Telecommunication Equipments. For The Assessment Year 2012-2013, The Return

For Appellant: Sri.S.Annamalai, AdvocateFor Respondent: Sri.Sumer Singh Meena, CIT-DR

Section 143(2)Section 143(3)Section 92BSection 92C

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “A”, BANGALORE Before Shri Chandra Poojari, AM & Shri George George K, JM

M/S Tejas Networks Limited, Bangalore vs. Assistant Commissioner of Income Tax Circle-1 Ltu, Bangalore

In the result, the appeals filed by the assessee are partly allowed

ITA 764/BANG/2017[2012-13]Status: DisposedITAT Bangalore31 May 2022AY 2012-13

For Appellant: Sri.S.Annamalai, AdvocateFor Respondent: Sri.Sumer Singh Meena, CIT-DR

Section 143(2)Section 143(3)Section 92BSection 92C

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “A”, BANGALORE Before Shri Chandra Poojari, AM & Shri George George K, JM

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

Tesco Bangalore Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-7(1)(1), Bangalore

In the result, the appeal of the assessee is treated as allowed for statistical purposes

ITA 602/BANG/2016[2011-12]Status: PendingITAT Bangalore23 May 2022AY 2011-12

Bench: Shri N. V. Vasudevan & Shri B. R. Baskaranit(Tp)A No.602/Bang/2016 Assessment Year : 2011-12 M/S. Tesco Bengaluru Private Limited, Dcit, Vs. (Earlier Known As Tesco Hindustan Service Circle – 7(1)(1), Centre Private Limited), Bengaluru. No.81 & 82, Tesco H S C, Epip Area, White Field, Bengaluru-560 066. Pan : Aabct 8915 B Appellant Respondent Assessee By : Shri. T. Suryanarayana, Advocate Revenue By : Shri. Sumer Singh Meena, Cit(Dr)(Itat), Bengaluru. Date Of Hearing : 22.02.2022 Date Of Pronouncement : 23.05.2022 O R D E R Per B. R. Baskaran:

For Appellant: Shri. T. Suryanarayana, AdvocateFor Respondent: Shri. Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru

Section 10ASection 143(3)Section 234BSection 234C

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI B. R

M/S. Shell Information Technology International B.V., Mumbai vs. Dy CIT (International Taxation)-4(2)(1), Mumbai

In the result, appeal by the assessee is allowed for statistical purpose

ITA 1245/MUM/2021[2017-18]Status: DisposedITAT Mumbai11 May 2022AY 2017-18

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Madhur AgarwalFor Respondent: Ms. Surabhi Sharma, CIT–DR

Section 143(3)Section 144C(13)Section 2(24)Section 234B

IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT AND SHRI SANDEEP SINGH KARHAIL