The assessee, a South Korean company engaged in manufacturing and selling electronic goods, had two wholly owned subsidiaries in India. The Assessing Officer held that the Indian subsidiary constituted a PE per se and also met the tests of DAPE as well as Service PE. On appeal, the Tribunal held that the seconded employees were not performing functions connected with the global enterprise of the assessee. Their placement in India was intended to facilitate the activities of the Indian subsidiary. Activities such as collecting market information, collating data for product development, studying market trends, or exchanging information would not meet the qualifying benchmarks of a PE. The addition was therefore deleted. On Revenue’s appeal, the Court affirmed the Tribunal’s order. (AYs. 2007-08 to 2009-10, 2011-12 to2015-16)
PCIT (IT) v. Samsung Electronics Co. Ltd. (2025) 303 Taxman 212 (Delhi)(HC)
S. 9(1)(i): Income deemed to accrue or arise in India – Business connection – Permanent Establishment – Service PE – Seconded employees in India – Objective of facilitating activities of Indian subsidiary – Employees would not meet qualifying benchmarks of a PE – Order of Tribunal deleting the addition affirmed – DTAA – India–South Korea [S. 260A, Art. 5]