Allowing the petitions the Court held that in the reasons recorded for initiating reassessment proceedings under section 147, the Deputy Commissioner (IT) had placed the assessee in all three categories of permanent establishments, namely, service permanent establishment, fixed place permanent establishment and dependent agent permanent establishment.. Court held that there is no finding that enterprise rendering services within India through employees of subsidiary or other personnel hence the ingredient is not satisfied therefore no creation of Permanent Establishment. Non-Existence of material to show Indian subsidiary authorised to or concluded any contracts for and on behalf of assessee hence not dependent agent Permanent Establishment. Discovery of assessee’s seal during survey irrelevant. Onus on department to establish existence of Permanent Establishment. Statements recorded during Survey not evidencing existence of Permanent Establishment. Indian subsidiary providing communication and consultancy support. Activities undertaken not beyond being preparatory or auxiliary. Revenue has not established with commonality of general purpose.Finding that Indian Subsidiary Permanent Establishment of assessee is unsustainable DTAA. Disposal, Control Virtual Projection and alter eg. India-United States of America (AY.2012-13 to 2018-19)
Progress Rail Locomotive Inc. v. Dy. CIT (IT) (2024)466 ITR 76 / 339 CTR 129/163 taxmann.com 52(Delhi)(HC)
S. 147 : Reassessment-Non-Resident-Permanent Establishment-Transactions found to be at arm’s length-Supplying materials through direct imports to Indian Railways-Allegation of wholly owned subsidiary-No material to prove conclusively that Indian Subsidiary’s place assessee’s Permanent Establishment falling in any of three Categories. Petition is allowed. Liberty is given to Department to independently examine whether Delhi Office of assessee a Permanent Establishment or service Permanent Establishment-DTAA-India-USA. [S.92CA, 133A, 148, Art.5(1), 5(2), 5(3), 5(4)]