The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that when the Indian A.E. is remunerated at arm’s length price no further profit attribution is required under the provisions of the Income Tax Act, 1961.
The assessee is a Singapore company engaged in the business of provision of supply chain management including the provision of freight forwarding and logistic services. The assessee had entered into a ―Regional Transportation Services Agreement with Indian Associated Enterprise namely UPS SCS (India) Pvt. Ltd. for the provisions of freight and logistics services. During the course of assessment proceedings, the assessee was asked to explain as to why the Indian A.E. should not be treated as Business Connection of the assessee in India under section 9(1)(i) of the Act and profit be attributable thereto for the relevant assessment year.
The assessee filed objections before the Dispute Resolution Panel against the addition proposed in the draft assessment order wherein the DRP rejected the objections filed by the assessee. The Assessing Officer, in conformity with the directions issued by the DRP, passed the final assessment order under section 143(3) r/w section 144C(13) of the Act.
Shri Nitesh Joshi, the Authorised Representative for the assessee submitted that the Indian A.E. of the assessee was remunerated at arm’s length price and, therefore, no further profit is required to be attributed in the present case.
Allowing the above contentions, the Tribunal bench comprising of Mr. Prashant Maharishi (Accountant Member) and Mr. Sandeep Singh Karhail (Judicial Member) held that “Insofar as the submissions made by the learned D.R. is concerned, we do not find any merit in same as the issues have already been decided by the Tribunal in favour of the assessee and against the Revenue in the preceding assessment years in assessee’s own case. Further, facts and circumstances of the present case are similar to the assessment year 2015–16, which have also not been denied by the Revenue. Thus, respectfully following the decision of the Co–ordinate Bench rendered in assessee’s own case cited supra, we hold that when the Indian A.E. is remunerated at arm’s length price no further profit attribution is required and the issue of existence of P.E. becomes wholly tax neutral.”
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