The assessee, a non-resident provider of data storage devices, acquired SD, USA on May 12, 2016, thereby becoming the ultimate holding company of SD India from that date, but the Assessing Officer, based on a survey conducted at SD India in January 2019, initiated reassessment for AY 2016-17 alleging that SD India constituted an agency PE of the assessee, treated salary reimbursements for seconded employees as fees for technical services, and attributed 30% of SD India\u2019s revenue as business income of the assessee, which was upheld in the final order passed pursuant to the DRP\u2019s directions. On appeal, the Tribunal held that since the date of acquisition fell outside FY 2015-16 relevant to the assessment year under consideration, and the transfer pricing reports, financials and party-wise sales details established no transaction or business connection between the assessee and SD India prior to the acquisition, the Revenue\u2019s reliance on post-acquisition survey material to impute an agency PE for a period before the assessee and SD India even became group entities reflected non-application of mind; accordingly, there was no basis for treating SD India as a PE of the assessee or for attributing any business profits or fees for technical services to it for the year under consideration, and the assessment was quashed.(AY. 2016-17)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 9(1)(i): Income deemed to accrue or arise in India-Business connection-Non-resident-Permanent establishment-Assessee acquiring group in May 2016, falling in financial year relevant to assessment year 2017-18-No transaction or business connection between assessee and Indian entity during relevant assessment year 2016-17, prior to date of acquisition-Indian entity not associated enterprise at relevant time-No agency permanent establishment-Assessment of attributed profits quashed-DTAA-India-USA. [art. 5(4)]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[21],"tags":[],"class_list":["post-62203","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-gbh","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=62203"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62203\/revisions"}],"predecessor-version":[{"id":62204,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62203\/revisions\/62204"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=62203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=62203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=62203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}