The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that GE Energy Parts did not have any permanent establishment in India as no expatriate employee was present in India during the impugned assessment years.
The assessee, GE Energy Parts Inc, and GE Global Parts & Products GMBH were non-resident corporate entities. The first named assessee was a tax resident of the USA. Whereas, the second named assessee was a tax resident of Switzerland. As stated by the Assessing Officer, both the assessees were engaged in the business of offshore supply of
plants, equipment, spare parts and related offshore services to customers in India in relation to maintenance of power plants.
While dealing with identical nature of transactions in past assessment years, notably, assessment years 2002-03 to 2006-07 and 2008-09, the Assessing Officer held that the assessee had a PE in India in the form of premises of General Electrical
International Operation Company (GEIOC) taken on lease at AIFACS building, 1 Rafi Marg, New Delhi, wherefrom, the assessees carried on solicitation of orders and conclusion of
contract by deputing expatriate employees.
It was further held that remuneration paid to the Indian AE, viz., GE India Industrial
Pvt. Ltd. (GEIIPL) was the only cost. The decision taken by the Assessing Officer in the aforesaid assessment years, though, were contested by the assessees upto the Hon’ble High Court, however, they failed. Based on the past assessment history, the Assessing Officer, while completing the assessments for the impugned assessment years, held that the assessee had a PE in India and accordingly attributed profit from offshore supply and
services to the alleged PE.
Sachit Jolly, on behalf of the assessee submitted that the issue was squarely covered by a decision of the Coordinate Bench in case of another assessee having identical
nature of dispute.It was pleaded by the assessee that in these years, no expatriates had visited India. As it appeared the departmental authorities had turned a blind eye to all the submissions and facts brought on record by the assessee.
The two-member Bench of G.S Pannu, (President) and Saktijit Dey, (Vice President) allowed the appeal filed by the assessee holding that merely following the decision taken by the appellate authorities and High Court in past assessment years, the departmental authorities had concluded the existence of PE without looking into or examining the facts and evidences brought on record, which were very much relevant for deciding the case existence of PE in the impugned assessment years.
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