The Bangalore Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the Assessing Officer’s ( AO ) decision classifying the Indian subsidiary as a Dependent Agent Permanent Establishment ( PE ) in software sales and remanded the matter for fresh examination.
QlikTech International AB ,appellant-assessee,is a foreign company selling software products. Its Indian subsidiary, QlikTech India Private Limited, paid Rs. 55.91 crore after deducting Tax Deducted at Source(TDS) of Rs. 5.59 crore, as shown in Form 26AS for the relevant year. However, the assessee did not include this payment in its taxable income and claimed a refund of the deducted TDS while filing its return.
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During the assessment, the AO found that based on agreements between the assessee and its Indian subsidiary, the subsidiary handled tasks like finding customers, negotiating prices, and finalizing contracts for the appellant’s product sales in India.
The AO determined that the Indian subsidiary was a dependent agency permanent establishment of the assessee. As a result, the AO taxed the assessee’s income in India at 30% on ₹96.87 crore from product sales. This decision was upheld by the Dispute Resolution Panel (DRP).
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The assessee appealed before the tribunal.
The two member bench comprising Keshav Dubey(Judicial Member) and Waseem Ahmed(Accountant Member) reviewed the arguments and records and found that the transaction between the appellant and its Indian subsidiary had already undergone Transfer Pricing Officer (TPO) adjustment. Since the sale was assessed under transfer pricing, the issue of a dependent agency permanent establishment did not arise.
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As the Transfer Pricing(TP) order was submitted as additional evidence and not verified by lower authorities, the ITAT set aside the issue back to the AO for fresh examination.
In short, the appeal filed by the assessee was allowed for statistical purposes.
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