Mitsui India not a DAPE of Mitsui Japan, no question of Computing Income of PE or any disallowance of Commission arises: ITAT [Read Order]

Mitsui India - DAPE - Mitsui Japan - income of PE - disallowance of commission - ITAT - Taxscan

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench held that Mitsui India not a Dependent Agent Permanent Establishment  (DAPE) of Mitsui, Japan.

The assessee-company, M/s. Mitsui & Co. Ltd. is incorporated in Japan and has a subsidiary in India, Mitsui India Pvt. Ltd. (MIPL).

In India, assessee has undertaken several projects in connection with big natural installment and power projects during the relevant year through its project office.

The Assessing Officer held that Mitsui India Pvt. Ltd., i.e., subsidiary of assessee-company is a Dependent Agent Permanent Establishment (DAPE) of Mitsui, Japan in India.

Accordingly he has attributed profit attributable to Indian operations by taking 50% of such profits was attributed to total trading turnover in India.

The CIT (A) has upheld the action of the Assessing Officer, holding that Mitsui India Pvt. Ltd. is a DAPE of the assessee-company.

However, CIT(A) has deleted the income attributed to the PE after observing and holding that the profit attributable to Indian operations is restricted to 20% as held in the preceding Assessment Year.

The Coram consists of Judicial Member Amit Shukla and Accountant Member N.K. Billaiya held that MIPL is not DAPE of the assessee-company, then ostensibly no income can be attributed to the assessee company under Article 7 of DTAA, and therefore, there cannot be any question of computing income of PE or any disallowance of commission which is otherwise at Arms’ Length Price.

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