M/s. Rolls Royce Plc, New Delhi V. DCIT, New Delhi

ITA 1205/DEL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1711 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G K DHALL
• Assessee Lawyers: S R PATNAIK; PERCIVAL BILLIMORIA
• Keywords: Transfer pricing; Double taxation relief; International transaction; Permanent establishment
• Section: 5(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2 NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 ASSESSMENT YEARS: 2004-05, 2005-06, 2006-07, 2007-0 8 & 2009-10 ROLLS ROYCE PLC., C/O LUTHRA & LUTHRA, CHARTERED ACCOUNTANTS, A-16/9, VASANT VIHAR, NEW DELHI. V. DEPUTY DIRECTOR OF INCOME TAX, CIRCLE-2(1), INTERNATIONAL TAXATION, NEW DELHI. TAN/PAN: AACCR6911L (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PERCIVAL BILLIMORIA & SHRI S.R. PATNAIK, CA RESPONDENT BY: SHRI G.K. DHALL, CIT-D.R. DATE OF HEARING: 12 04 2019 DATE OF PRONOUNCEMENT: 07 2019 O R D E R PER AMIT SHUKLA, JM:- THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESSE , ROLLS- ROYCE PLC., A COMPANY INCORPORATED IN THE UNITED KING DOM. THE PRESENT APPEALS ARE FOR THE A.YS. 2004-05; 2005-06; 2 007-08; & A.Y. 2009-10. SINCE ISSUES INVOLVED IN ALL THE IMPUG NED APPEALS ARE COMMON ARISING OUT OF IDENTICAL SET OF ACTS, THEREF ORE, SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. THE CORE ISSUE INVOLVED IN ALL THE APPEALS IS , WHETHER THE ASSESSE COMPANY HAS A PE IN INDIA IN THE FORM OF LI AISON OFFICE OF M/S. ROLLS ROYCE INDIA LTD., A SEPARATE ENTITY FOR ITS SALE OF GOODS I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 2 IN INDIA AND CONSEQUENTLY THE ATTRIBUTION OF PROFITS OF THE PE IN INDIA. 2. AT THE OUTSET, IT WOULD RELEVANT TO MENTION HERE THAT, I N ASSESSEES OWN CASE THIS TRIBUNAL IN THE APPEALS FOR THE ASSESSMENT YEARS 1997-98 TO 2000-01; AND ASSESSMENT YE ARS 2002-03 AND 2003-04, THE ISSUE OF PE HAS BEEN DECIDE D AGAINST THE ASSESSE AND ALSO THE ISSUE OF ATTRIBUTION OF PROFI T, WHICH MATTER HAD ALSO TRAVELLED UP TO THE HONBLE DELHI HIGH COURT AND BY AND LARGE THE ORDER OF THE TRIBUNAL HAS BEEN UPHELD. HOWE VER, BEFORE US THE LEARNED COUNSEL FOR THE ASSESSE, MR. PERCIVAL BILLIMORIA SUBMITTED THAT NOT ONLY THE FACTS AND CIRCUMSTANCES HAVE CHANGED BUT ALSO NOW THERE ARE JUDICIAL PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT ON THE CONCEPT OF PE. BEFORE WE DISCUSSE D THE ARGUMENTS PUT FORTH BY BOTH THE PARTIES IT WOULD BE RELEVA NT TO CAPTURE THE BACKGROUND AND BRIEF FACTS OF THE CASE. 3. ROLLS ROYCE PLC (HEREIN REFERRED TO AS ASSES SEE OR RRPL), IS A UK BASED COMPANY, WHICH HAS A WHOLLY OWNED SUBSIDIA RY, ROLLS ROYCE INTERNATIONAL LTD., WHICH IN TURN HAS ANOTHER WH OLLY OWNED SUBSIDIARY, ROLLS ROYCE INDIA LTD. (HEREIN REFERRED TO AS RRIL). BOTH THESE SUBSIDIARIES ARE ALSO INCORPORATED IN UK, THERE EXISTS A SERVICE AGREEMENT BETWEEN ROLLS ROYCE INTERNATIONAL LTD. AND ROLLS ROYCE INDIA LTD. RRIL IN TURN HAD SET UP A LIAISON OFF ICE (LO) IN INDIA TO UNDERTAKE THE RELEVANT SERVICES IN INDIA. THE ASSESSEE RRPL WAS SUPPLYING AERO-ENGINES AND SPARE PARTS TO IN DIAN CUSTOMERS MAINLY, TO M/S. HINDUSTAN AERONAUTICS LIMITE D AND ALSO RENDERING SERVICES TO HAL, INDIAN NAVY AND INDI AN AIR FORCE. OTHER GROUP COMPANIES, NAMELY, ROLLS ROYCE INDIA LTD. IS ALSO RESIDENT OF UK AND HAS LIAISON OFFICE TO CARRY OUT THE ACTIVITIES ON BEHALF OF THE ASSESSE COMPANY RRPL. THE ASSESSEE-COM PANY BEING I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 3 A NON-RESIDENT WAS NOT FILING ANY RETURN OF INCOME I N INDIA ON THE ASSUMPTION THAT THE INCOME FROM SALE OF GOODS FROM OU TSIDE INDIA WAS NOT TAXABLE IN INDIA. THE AO NOTED THAT ASSESSE HAD ENTERED INTO AN AGREEMENT WITH RRIL ON 01.07.1979 FOR RENDER ING CERTAIN SERVICES FROM INDIA OVER THE TERRITORY OF INDIA, NEPA L, BANGLADESH, BHUTAN AND SRI LANKA AND AS PER THE AGREEMENT, RRIL W AS REQUIRED TO PERFORM THE FOLLOWING SERVICES IN LIEU OF COMPENSATION OF 6% OVER THE COST INCURRED:- I) TO OBTAIN AND REPORT TO ROLLS ROYCE ON A REGULAR BA SIS SUCH MARKETING INFORMATION AS IS CONSIDERED TO BE RELEVA NT TO ROLLS ROYCE INTEREST. II) TO DISSEMINATE SUCH MARKETING AND COMMERCIAL IN FORMATION RELATING TO ROLLS ROYCE'S PRODUCTS AS ROLLS-ROYCE M AY REQUIRE. III) TO PROVIDE ADMINISTRATIVE AND SECRETARIAL ASSI STANCE LOCALLY FOR THE SERVICES REPRESENTATIVE DEPLOYED IN THE TERRITO RY. IV) TO PROVIDE A LIAISON SERVICE BETWEEN ROLLS ROYC E AND RELEVANT DEPARTMENTS OF INDIA AND OTHER CUSTOMERS OF ROLLS R OYCE IN THE TERRITORY IN ALL MATTERS OF SUPPLY OF PRODUCTS AND SERVICES. V) TO MONITOR THE EFFECTIVENESS OF ROLLS-ROYCE'S C OMMERCIAL. VI) TO LOOK AFTER THE ROLLS ROYCE VISITORS IN INDIA AND ARRANGEMENT FOR STAY AND ITINERARY. 4. A SURVEY U/S.133A WAS CONDUCTED AT THE LIAISON OFFI CE OF RRIL ON 09.01.2006 AT DELHI OFFICE AND ALSO CERTAIN S TATEMENTS WERE RECORDED. THE AO ON THE BASIS OF SURVEY HAD NO TED THE FOLLOWING FACTS:- I) THAT OFFICE OF RRIL IS A FIXED PLACE OF BUSINESS AT THE DISPOSAL OF THE ROLLS ROYCE PIC AND ITS GROUP COMPANIES IN INDI A THROUGH WHICH THE THEIR BUSINESS ARE CARRIED ON. THERE ARE VARIOU S OTHER PROJECT I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 4 OFFICES AND OTHER COMPANIES BELONGING TO RR GROUP B EING RUN FROM THAT PREMISES. II) THE ACTIVITY OF THIS FIXED PLACE IS NOT A PREPA RATORY OF AUXILIARY, BUT IS A CORE ACTIVITY OF MARKETING, NEGOTIATING, S ELLING OF THE PRODUCT. THIS IS A VIRTUAL EXTENSION/PROJECTION OF ITS CUSTOMER FACING BUSINESS UNIT, WHO HAS THE RESPONSIBILITY TO SELL T HE PRODUCTS BELONGING TO THE GROUP. III) RRIL ACTS LIKE A SALES OFFICE OF RRPL C AND ITS GROUP COMPANIES. IV) RRIL AND ITS EMPLOYEES WORK WHOLLY AND EXCLUSIV ELY FOR THE ROLLS ROYCE PIC AND THE GROUP. V) RRIL AND ITS EMPLOYEES ARE SOLICITING AND RECEIV ING ORDERS WHOLLY AND EXCLUSIVELY ON BEHALF OF THE ROLLS ROYCE GROUP. VI) EMPLOYEES OF ROLLS ROYCE GROUP ARE ALSO PRESENT IN VARIOUS LOCATIONS IN INDIA AND THEY REPORT TO THE DIRECTOR OF RRIL IN INDIA. VII) RRIL AND ITS EMPLOYEES ARE ALSO SERVICE PERMAN ENT ESTABLISHMENT OF ROLLS ROYCE PLC AND GROUP. VIII) THE PERSONNEL FUNCTIONING FROM THE PREMISES O F RRIL ARE IN FACT EMPLOYEES OF ROLLS ROYCE PLC. THIS HAS BEEN ADMITTE D BY THE M.D. MR. TIM JONES, G.M., MR. AJIT THOSAR AND DOCUMENTS LIKE TERMS OF EMPLOYMENT OF G.MS. 4.1 THUS, IT WAS CONCLUDED THAT OFFICE OF RRIL IN INDI A WAS PE OF RRPL UNDER ARTICLE 5(2)(F) OF INDIA-UK DTAA AND A LSO UNDER ARTICLE 5(2)(K). ACCORDINGLY, ASSESSING OFFICER COMP UTED THE TOTAL PROFITS ON THE CONTRACT OF THE ASSESSE-COMPANY IN IND IA AS PER RULE 10; AND HELD THAT 75% OF THE PROFITS SHOULD BE ATTRIBUTED TO PE IN INDIA. THE SAME APPROACH WAS ADOPTED IN THE EARLIER YEARS ALSO WHICH HAS BEEN DECIDED UP TO THE STAGE OF HONBLE HIGH COURT. I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 5 5. LEARNED CIT (A) HAS FOLLOWED THE EARLIER YEAR S ORDERS, AND HAS CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER INCLUDING THE PROFIT ATTRIBUTION. 6. BEFORE US, LEARNED COUNSEL FOR THE ASSESSE, MR. PERCIVAL BILLIMORIA, VEHEMENTLY ARGUED THAT THERE ARE VARIOU S REASONS AS TO WHY THE ASSESSE CANNOT BE SAID TO HAVE PE IN INDIA; AND SINCE EACH ASSESSMENT YEAR IS INDEPENDENT AND THE I SSUE OF PE IS ALWAYS FACT BASED, THEREFORE, THIS ISSUE SHOU LD BE LOOKED INTO INDEPENDENTLY FOR EACH ASSESSMENT YEAR. NOW TH E ENTIRE FACTS HAS TO BE SEEN AND CONSTRUED IN LIGHT OF THE LEGAL PRINCIPLE SETTLED BY THE HONBLE SUPREME COURT IN T HE CASES OF FORMULA WORLD CHAMPIONSHIP LTD. V . COMMISSIONER OF INCOME-TAX, (INTERNATIONAL TAXATION)-3, DELHI, (201 7) 394 ITR 80; AND ADIT VS. E FUNDS IT SOLUTION INC., (2014) 364 ITR 256 . HE SUBMITTED THAT RRPL AND RRIL ARE SEPARATE AND DISTINCT ENTITIES AND THE LIAISON OFFICE WAS SET UP BY RRIL FOR ITS OWN ACTIVITIES AND NOT BY RRPL. NONE OF THE ACT IVITIES OF THE SALES OF SPARE PARTS, ETC. OF RRPL WAS CARRIED OUT THROUGH THE LIAISON OFFICE AND THERE IS ABSOLUTELY NO BASIS OR MATERIAL FOUND DURING THE COURSE OF SURVEY THAT THE LIAISON OFFICE OF RRIL WAS IN ANY MANNER AT THE DISPOSAL OF RRPL OR T HERE WAS ANY KIND OF DEPENDENT AGENT PE. THE AUTHORITIES BEL OW ON THE BASIS OF SURVEY CONDUCTED AT LIAISON OFFICE OF RRIL HAVE ALLEGED THAT ACTIVITIES UNDERTAKEN BY RRIL IN INDIA WERE MUCH MORE THAN LIAISON ACTIVITIES AND REPRESENT THE PE O F RRPL. LATER ON, THE SAME ACTIVITIES OF RRIL HAVE BEEN HEL D TO CONSTITUTE PE OF RRIL. THUS, LIAISON OFFICE HAS BEE N TREATED TO I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 6 BE PE OF BOTH THE ENTITIES, EVEN THOUGH BOTH THESE ENTITIES ADMITTEDLY CARRIED OUT TWO DIFFERENT SET OF ACTIVIT IES. THE SAME SET OF ACTIVITIES CANNOT GIVE RISE TO ATTRIBUTION O F INCOME TWICE, ONCE ATTRIBUTION OF PE OF RRIL IN INDIA AND THEN AG AIN IN THE CASE OF THE ASSESSE. THOUGH, HE ADMITTED THAT THIS ISSUE HAD COME FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE E ARLIER YEARS, HOWEVER, THERE IS ONE CHANGE IN THE FACTS TH AT ON 1 ST APRIL, 2013, THE COMPETENT AUTHORITIES OF INDIA AND UK HAVE AGREED TO ATTRIBUTION OF INCOME TO THIS PE OF RRIL UNDER MAP IN TERMS OF TREATY. THUS, WHEN THE SAME ACTIVITIES EVIDENCED BY THE SAME SET OF FACTS CANNOT GIVE RISE TO TWO SE PARATE PES, AND IF ANY ATTRIBUTION HAS BEEN FINALIZED FROM THAT PARTICULAR PE, THEN NO PROFIT SHOULD BE ATTRIBUTED ONCE AGAIN IN THE HANDS OF THE ASSESSE ALSO. IN SUM AND SUBSTANCES, T HE CRUX OF HIS ARGUMENT IS THAT, FIRSTLY, RRPL CANNOT BE SAID TO HAVE PE IN INDIA AS IT IS PURELY MAKING SALE FROM OUTSIDE I NDIA; SECONDLY, LO WAS NEVER AT DISPOSAL OF RRPL FOR ANY OF ITS ACTIVITIES OR FOR ITS EMPLOYEES; THIRDLY, THERE IS NO DAPE IN THE FORM OF LO; FOURTHLY, WITHOUT PREJUDICE, SAME ACTIV ITIES ARISING FROM SAME SET OF FACTS CANNOT GIVE RISE TO 2 PES, I .E., ONE PE OF RRPL AND THEN OTHER PE FOR RRIL; AND LASTLY, ATTRIB UTION OF PE OF RRIL HAS ALREADY ATTAINED FINALITY UNDER MAP RES OLUTION FOR THE SAME ASSESSMENT YEARS, THEREFORE, THE SAME PE C ANNOT BE TAXED AGAIN IN THE HANDS OF RRPL. HE ALSO LAID EMPH ASIS TO DEMONSTRATE THAT THE ALLEGED PE OF RRPL HAS BEEN CO NSIDERED PE OF RRIL BY THE DEPARTMENT FROM THE ORDERS OF THE LD. CIT(A) IN THE CASE RRIL, WHO HAS INDEPENDENTLY RECO RDED A I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 7 FINDING OF PE OF RRIL IN INDIA, BASED ON THE SAME A CTIVITIES, RELYING ON THE SAME SET OF AVERMENTS CONTAINED IN T HE SAME REMAND REPORT. WHENCE THE ACTIVITIES ALLEGED TO BE WITHIN THE SCOPE OF THE PE OF RRIL ARE THE SAME, THEN SAME ACT IVITIES CANNOT BE PE OF RRPL, THAT IS, SALES AND MARKETING AND THE ACTIVITIES PE OF RRIL THEN FURTHER INCOME CANNOT BE ATTRIBUTED TO RRPL FROM SAME PE AS NOW PE STANDS ASSESSED AS B EING A COMPLETE MARKETING AS WELL AS SALES OPERATION AND N OT JUST AS A SERVICE PROVIDER. TO PROVE HIS POINT, HE HAS ALSO POINTED OUT CERTAIN OBSERVATIONS AND FINDINGS IN THE ORDER OF T HE LD. CIT (A) IN VARIOUS PARAS THAT ACTIVITIES WERE SAME AND ALSO DREW OUR ATTENTION TO VARIOUS OBSERVATIONS OF THE AO IN THE REMAND REPORT. THUS, HE SUBMITTED THAT PROFITS OF PE OF RR IL GOT SETTLED FROM THE MAP ORDER AND ONCE SIMILAR ACTIVIT IES FOR PE AND ATTRIBUTION HAVE BEEN MADE IN THE CASE OF RRIL, THEN AGAIN FURTHER ATTRIBUTION CANNOT BE MADE IN THE CAS E OF ASSESSE. 7. BEFORE US, THE LD. CIT-DR, MR. G.K. DHALL, POINT ED OUT THAT ALL THOSE ISSUES WHICH HAS BEEN RAISED BY THE AO AND LD. CIT(A) HAVE BEEN DISCUSSED THREADBARE INCLUDING THE ARGUMENTS TAKEN BY THE LD. COUNSEL BY THE TRIBUNAL IN THE PRECEDING ASSESSMENT YEAR WHICH HAS NOW BEEN UPHELD BY THE HONBLE HIGH COURT. EVEN THE LD. CIT (A) HAS FOLLOW ED THE FINDINGS GIVEN IN THE EARLIER ASSESSMENT YEARS AND ASSESSE ITSELF HAS SUBMITTED BEFORE THE AO DURING THE COURS E OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2005-06 THAT THE FACTS AND CIRCUMSTANCES PREVAILING DURING THE F INANCIAL I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 8 YEAR 2003-04 HAS NOT CHANGED DURING THE FINANCIAL Y EAR 2004-05 AND THERE IS NO CHANGE IN THE BUSINESS MODE L OR PROCESS. THUS, IT WAS NEVER THE CASE OF THE ASSESSE BEFORE THE LD. CIT (A) AND AO THAT THE FACTS OF THE CASE FOR T HE YEAR UNDER CONSIDERATION ARE SEPARATE AND DISTINGUISHABLE FROM THOSE OF THE EARLIER YEARS. ONE OF THE ARGUMENTS WHICH WAS R AISED BY THE LD. COUNSEL THAT THERE ARE CHANGES IN DOMESTIC LAW, W.E.F., 2019-2020 IN SECTION 9(1), BUT SAME CANNOT BE APPLI ED RETROSPECTIVELY. ONCE, IT IS ESTABLISHED BY THE REV ENUE DURING THE EARLIER YEARS, THAT THERE IS A PE THEN NO DIFFE RENT VIEW CAN BE TAKEN IN THIS YEAR. THUS, ISSUE NOW STANDS COVER ED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WHI CH HAS BEEN CONFIRMED BY THE HONBLE DELHI HIGH COURT ALSO WHICH HAS A BINDING PRECEDENCE. 8. IN SO FAR AS THE SETTING-OFF THE INCOME ATTRIBUT ED TO RRIL FROM THE INCOME ATTRIBUTED TO RRPL, HE SUBMITTED TH AT SAME CANNOT BE ACCEPTED, BECAUSE IT WAS NEVER THE CASE O F THE REVENUE THAT RRIL AND RRPL ARE SAME OR ONE ENTITY A ND THE ATTRIBUTION OF PROFIT OF RRIL HAS NOTHING TO DO WIT H RRIL. THE FACTS AND FINDING RECORDED BY THE TRIBUNAL IN THE C ASE OF THE ASSESSEE FOR ATTRIBUTION OF PROFIT OF PE, HAS BEEN HIGHLIGHTED BY HIM IN THE FOLLOWING MANNER: A. TAXATION IN THE HANDS OF RRPIC - ITAT ORDER DT.26/10/07 FOR RRPIC [P.76-10S OF PB-2 FOR A.Y. 2004- 05] I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 9 THE SUPPORT SERVICES REQUESTED BY ROLLS-ROYCE INT ERNATIONAL [RRIL] & PERFORMED BY ROLLS ROYCE INDIA LTD. [RRIL] . [PARA-19, P.91] THE ACTIVITY OF THIS FIXED PLACE IS A CORE ACTIVI TY OF MARKETING, NEGOTIATING, SELLING OF THE PRODUCT BELONGING TO TH E GROUP. [P.102] 35% OF GLOBAL PROFITS IN RESPECT OF SALES EFFECTE D IN INDIA ATTRIBUTED TO PE [I.E. MARKETING ACTIVITIES ONLY; P .105] ITAT ORDER DT.30/01/09 FOR RRPIC [MA][P. 106-114 OF PB-2 FOR A.Y. 2004-05] CLAIM BY ASSESSEE - SINCE AGENT OF THE ASSESSEE N AMELY RRIL IS REMUNERATED IN TERMS OF AGREEMENT WITH IT, AND THE AO/TPO HAS ALSO ATTRIBUTED PROFIT TO THE PE IN THE FORM OF DEP ENDENT AGENT, NAMELY RRIL, NO FURTHER INCOME IS TAXABLE IN THE HA NDS OF THE ASSESSEE IN VIEW OF THE DECISION OF HON'BLE SC IN T HE CASE OF MORGAN STANLEY & CO INC.[P.110] 'THE ASSESSEE CARRIED ON MARKETING ACTIVITIES IN INDIA/OR WHICH PURPOSE ITS OWN EMPLOYEES AS WELL AS THE EMPLOYEES OF RRIL WERE EMPLOYED. THE AGREEMENT WITH RRIL AS NOTED IN PARA 19 OF THE ORDER WAS TO RENDER ONLY SUPPORT SERVICES BUT IN FA CT THE ACTIVITIES CARRIED ON BY THE ASSESSEE AND WITH THE ASSISTANCE OF RRIL WERE MUCH MORE THAN THAT AS PER MATERIAL FOUND DURING SU RVEY AND AS NOTED IN PARA 19 OF THE ORDER. THIS FACTUAL FINDING HAS NOT BEEN CHALLENGED AS PERVERSE OR OTHERWISE NOT CARVED OUT FROM THE MATERIAL FOUND DURING SURVEY. EVEN THE FACTUAL FIND ING GIVEN IN OTHER PARAGRAPHS LIKE 21, 22 & 23 ARE ALSO NOT CHAL LENGED. THEREFORE, THE EFFECT OF THIS FINDING IS THAT THE A PPELLANT'S SALES TO INDIAN CUSTOMERS ARE NOT SECURED ENTIRELY THROUGH S ERVICES OF THE AGENT IN INDIA FOR WHICH IT WAS APPOINTED BUT BY DE PUTING OWN PERSONNEL AND ALSO AVAILING THE SERVICES OF RRIL WH ICH WAS NOT PART OF THE AGREEMENT WITH RRIL. THE EXTINGUISHMENT OF A SSESSMENT AS I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 10 ENVISAGED IN PARA 6(C) OF CIRCULAR NO 23 OF 1969 WI LL NOT APPLY AS IN THIS EASE THE NON-RESIDENT PRINCIPAL'S BUSINESS ACT IVITIES IN INDIA ARE NOT WHOLLY CHANNELLED THROUGH HIS AGENT IN INDIA. T HE ASSESSMENT IN INDIA WILL BE ON THE SUM TOTAL OF THE AMOUNT OF PROFIT ATTRIBUTED TO HIS AGENTS IN INDIA AND THE AMOUNT OF PROFIT ATTRIB UTABLE TO HIS OWN ACTIVITIES IN INDIA. SINCE IT IS FOUND THAT THE APP ELLANT'S BUSINESS ACTIVITIES IN INDIA ARE NOT WHOLLY CHANNELLED THROU GH HIS AGENT IN INDIA BUT BECAUSE OF THE ACTIVITIES OF THE ASSESSEE ITSELF AS WELL AS ITS AGENT AND IN RESPECT OF SUCH SERVICES OF AGENT, THE AGENT HAS NOT BEEN REMUNERATED FOR THE REASON THAT SUCH SERVICES ARE NOT PART OF AGREEMENT WITH THE AGENT FOR WHICH REMUNERATION IS ACTUALLY PAID. THEREFORE, IT CAN BE HELD THAT INCOME IS ATTRIBUTAB LE TO THE PE IN INDIA.' [PARA 5; P.112] ' ... ASSESSMENT OF NON-RESIDENT WILL EXTINGUISH ONLY WHERE PROFIT ATTRIBUTABLE TO THE P.E. IS EQUAL TO THE REMUNERATI ON PAYABLE TO THE AGENT IN INDIA. HOWEVER, THE AGENT IN INDIA IS REMU NERATED ONLY ON THE BASIS OF COST PLUS 6% FOR THE SERVICES THAT WER E TO BE RENDERED IN TERMS OF THE AGREEMENT. BUT IN THE PRESENT CASE THE REMUNERATION TO THE AGENT DOES NOT TAKE INTO ACCOUNT ALL THE RIS K TAKING FUNCTIONS OF THE NON-RESIDENT ENTERPRISE. FOR THE FUNCTIONS P ERFORMED BY THE ASSESSEE DIRECTLY AND ALSO THE RISK ASSUMED BY THE NON- RESIDENT IN INDIA, NO REMUNERATION IS PAYABLE TO THE AGENT IN I NDIA. THE SERVICES RENDERED BY AGENT IN INDIA IS MUCH MORE TH AN EXPECTED OF IT IN TERMS OF THE AGREEMENT AND OBVIOUSLY FOR WHIC H THE AGENT IS NOT REMUNERATED. THEREFORE, EVEN IN TERMS OF HON'BL E SUPREME COURT'S DECISION IN SUCH, A CASE THERE WOULD BE NEE D TO ATTRIBUTE PROFITS TO THE P.E. FOR THOSE FUNCTIONS/RISKS THAT HAVE NOT BEEN CONSIDERED. IN THE ORDER, THE TRIBUNAL HAVE ALSO CO NSIDERED THAT THE P.E. IN INDIA IS NOT ONLY BECAUSE OF THE DEPENDENT AGENT'S PRESENCE IN INDIA BUT ALSO BECAUSE OF FIXED PLACE AS PER ART ICLE 5(1) AND ALSO IN TERMS OF ARTICLE 5(4)(C) OF THE TREATY. THE EXTI NGUISHMENT AS I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 11 PROPOUNDED AS PER CIRCULAR 23 OF 1969 OR AS HELD BY THE HON'BLE SUPREME COURT IN MORGAN STANLEY & CO. INC. (SUPRA) WILL APPLY ONLY WHERE THE PROFIT ATTRIBUTABLE TO THE NON-RESIDENT I S ONLY TO THE EXTENT OF REMUNERATION PAYABLE BY THE NON-RESIDENT TO THE AGENT. THEREFORE, THE ASSESSMENT IN THE PRESENT CASE WILL NOT EXTINGUISH AND THE INCOME WILL BE COMPUTED ON THE BASIS OF FIN DING GIVEN IN PARA 24 OF THE ORDER.'[PARA 5; P.L13] AS EVIDENT FROM THE ABOVE- THE PROFIT ATTRIBUTED TO THE PE OF THE ASSESSEE RRP LC IS ON THE BASIS OF THE 'PROFIT ATTRIBUTABLE TO HIS OWN ACTIVITIES I N INDIA' WHICH'ARE NOT WHOLLY CHANNELLED THROUGH HIS AGENT IN INDIA' . MOREOVER, THE PROFIT IS ATTRIBUTED 'NOT ONLY BECAUS E OF THE DEPENDENT AGENT'S PRESENCE IN INDIA BUT ALSO BECAUSE OF FIXED PLACE AS PER ARTICLE 5(1) AND ALSO IN TERMS OF ARTICLE 5(4)(C) O F THE TREATY.'IT MAY ALSO BE REMEMBERED THAT THE ASSESSEE DOES NOT MAINT AIN ANY BOOKS AND THUS, A PART OF ITS 'GLOBAL PROFITS' ARE ATTRIB UTED TO ITS PE . ANOTHER IMPORTANT FACT THAT MUST BE KEPT IN MIND IS THAT THE AO HAS NOT ATTRIBUTED OR TAXED ANY INCOME IN THE HANDS OF RRLL FOR ITS ALLEGED SERVICES TO RRPIC. WHAT HAS BEEN TAXED IN THE HANDS OF RRIL AND WHICH HAS BEEN SUBJECTED TO TP ADJUSTMENTS AS WELL AS MAP PROCEEDI NGS IS THE TRANSACTION BETWEEN RRIL & RRLNT ONLY. MOREOVER, THE FUNCTIONS CARRIED ON BY RRIL AS PER S ERVICE AGREEMENT ARE COMPLETELY DIFFERENT, DISTINCT AND IN DEPENDENT FROM THE ACTIVITIES OF RRPLC . THE ASSESSEE HAS NOT PAID OR REMUNERATED ANY AMOUNT TO RRIL AND AS SHOWN HEREUNDER, RRIL IS NOT WORKING FOR RRPIC . I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 12 RRIL HAS FILED ITS ROI DISCLOSING THE VALUE OF ITS INTERNATIONAL TRANSACTIONS WITH RRLNTL WHICH WERE SUBJECTED TO TP ADJUSTMENTS AND NO PART OF THE TRANSACTIONS RELATE TO THE ASSES SEE RRPIC . THE FUNCTIONS CARRIED ON BY RRIL ARE FOR RRLNTL AND NO FURTHER ATTRIBUTION/ADJUSTMENTS TOWARDS THE SERVICES PROVID ED TO RRPIC WERE MADE IN THE HANDS OF RRLL. IN VIEW OF THE ABOV E, THERE IS NO SCOPE OF DOUBLE TAXATION OF THE SAME INCOME OR SAME FUNCTIONS BOTH IN THE HANDS OF RRPLC & RRIL AS CLAIMED BY THE ASSE SSEE. B. TAXATION IN THE HANDS OF RRIL- ACTIVITIES OF RRIL- THE ASSESSEE IS A LO OF THE ROLLS ROYCE GROUP. IT P ROVIDES COMMERCIAL INFORMATION SERVICE AND MARKETING SUPPOR T SERVICE TO ROLLS ROYCE INTERNATIONAL LTD. (RRLNT) [TPO, P. 1 O F PB-2 FOR A.Y. 2004-05] THE ASSESSEE IS SAID TO BE IN THE LIAISON ACTIVITIE S ON BEHALF OF ITS PARENT RRLNT IN INDIA. [AO, P. 10 OF PB-2 FOR A.Y. 2004-05] 'THE SUPPORT SERVICES REQUESTED BY RRLNT & PERFORME D BY RRIL.. ... '[ITAT, PARA-19,P. 91 OF PB-2 FOR A.Y. 2004-05] RRIL IS A FIXED PLACE OF BUSINESS AT THE DISPOSAL O F RRPLC & ITS GROUP COMPANIES. [HC, PARA16; P.122] RRIL HAS THE RESPONSIBILITY TO SELL THE PRODUCTS BE LONGING TO THE GROUP. [HC, PARA16; P.122] RRIL ACTS LIKE A SALES OFFICE OF RRPLC & ITS GROUP COMPANIES. [HC, PARA16; P.122] I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 13 RRIL AND ITS EMPLOYEES WORK FOR RRPIC& THE GROUP. [ HC, PARA16; P.122] RRIL SOLICIT & RECEIVE ORDERS ON BEHALF OF RR GROUP . [HC, PARA16; P.122] EMPLOYEES OF RR GROUP ARE PRESENT AND REPORT TO RRI L. [HC, PARA16; P.122] RRIL IS COMPENSATED ON THE BASIS OF AGREEMENT BETWE EN RRIL & RRLNT. [TPO, P. 2 OF PB-2 FOR A.Y. 2004-05] TP ADJUSTMENT IN RESPECT OF INTERNATIONAL TRANSACTI ONS WITH RRLNT. [TPO, P. 2 OF PB-2 FOR A.Y. 2004-05] AS CAN BE SEEN, RRIL 'PROVIDES COMMERCIAL INFORMATI ON SERVICE AND MARKETING SUPPORT SERVICE TO ROLLS ROYCE INTERNATIO NAL LTD.' IT IS THE FUNCTIONS CARRIED ON BY RRIL VIS-A-VIS ITS SERVICE AGREEMENT WITH RRLNTL WHICH WAS THE SUBJECT MATTER OF TP ADJUSTMEN TS. RRIL WAS NEVER SUBJECTED TO TAXATION W.R.T. ANY SERVICES IT HAD PROVIDED TO THE ASSESSEE RRPLC. 9. IN SO FAR AS THE PLEADINGS OF THE LD. COUNSEL FO R THE ASSESSEE THAT ATTRIBUTION OF PROFIT STANDS SETTLED BY MAP IN THE CASE OF RRIL, HE SUBMITTED MAP ONLY TAKES CARE OF RELIEF OR REMOVES DOUBLE TAXATION, IF ANY AND ANY INCOME ATTR IBUTED THROUGH THE PROCESS OF MAP CANNOT BE HELD TO BE TA XED NOT IN ACCORDANCE WITH THE CONVENTION. IN OTHER WORDS, NE ITHER THE INCOME IN ITS ENTIRETY NOR ANY PART OF IT WHICH WAS ATTRIBUTED THROUGH MAP REPRESENTS AN AMOUNT WHICH HAS BEEN SUBJECTED TO DOUBLE TAXATION. THE ENTIRE INCOME AND PROFIT IS I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 14 ONLY WITH REGARD TO RRIL AND IT HAS NO BEARING WHAT SOEVER ON THE PROFIT ATTRIBUTED TO RRPL AND THERE IS NO DOUBL E TAXATION. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS MATERIAL REFERRED TO BEFORE US. LD. COUNSEL FOR THE ASSESSE HAD SET OUT VARIOUS REASONS AS TO WHY RRPL CANNOT BE SA ID TO HAVING ANY PE IN INDIA MAINLY FOR THE REASON THAT, IT WAS ONLY SUPPLYING AERO-ENGINES AND SPARE PARTS TO THE INDIA N CUSTOMERS ON PRINCIPAL TO PRINCIPAL BASIS. THE SERV ICE AGREEMENT FOR CARRYING OUT VARIOUS OTHER TECHNICAL SERVICES WAS BETWEEN RRIL AND RR INTERNATIONAL AND RRIL FOR HAS SET UP A LIAISON OFFICE IN INDIA TO UNDERTAKE THE RELEV ANT SERVICE IN INDIA, FOR WHICH WAS COMPENSATED ON MARK UP BASIS. THUS, THE ACTIVITIES OF THE ALL THE THREE ENTITIES WERE E NTIRELY DIFFERENT. THE LIAISON OFFICE OF RRIL WAS NEITHER N EGOTIATING ANY CONTRACT FOR SALES NOR WAS CARRYING OUT ANY ACT IVITY RELATING TO SALES. NEITHER THE LO WAS IN ANY MANNER AT THE DISPOSAL OF RRPL EVEN FOR ITS EMPLOYEES. THUS, IN V IEW OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF FORMULA WORLD CHAMPIONSHIP LTD. V . COMMISSIONER OF INCOME-TAX, (INTERNATIONAL TAXATION)-3, DELHI, (SUPRA) AND ADIT VS. E FUNDS IT SOLUTION INC., (SUPRA), THERE CANNOT BE ANY PE IN FORM OF LO. EVEN THOUGH WE MAY SLIGHTLY FEEL PERSUA DED BY HIS ARGUMENT THAT PE HAS TO BE SEEN QUA THE ACTIVITIES CARRIED BY A FOREIGN ENTERPRISE IN INDIA THROUGH A FIXED PL ACE BUSINESS OR ANY SUCH PLACE WHICH IS AT ITS DISPOSAL, HOWEVER , PRECISELY THE SAME ISSUE HAD COME UP FOR CONSIDERATION IN ASS ESSEES I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 15 OWN CASE BEFORE THIS TRIBUNAL ON SIMILAR SET OF FAC TS, WHEREIN TRIBUNAL AFTER DETAILED REASONING AND FINDING HAS H ELD THAT THE LIAISON OFFICE OF RRIL ALSO CONSTITUTES A PE FO R THE ASSESSE, I.E., RRPL IN INDIA. THE HONBLE DELHI HIGH COURT T HOUGH HAS UPHELD THE ORDER OF THE TRIBUNAL, HOWEVER HAS NOTED THAT THE ISSUE OF PE WAS NOT PRESSED OR ARGUED. NOW THAT THI S MATTER IS PENDING BEFORE THE HONBLE SUPREME COURT AS INFO RMED BY THE LD. COUNSEL, THEREFORE, AS A MATTER OF JUDICIAL PRECEDENCE, WE CANNOT TAKE A DIFFERENT VIEW AND DECIDE THE ISSU E A FRESH TAKING ANY OTHER VIEW. ANOTHER SET OF ARGUMENT PLAC ED BY THE LD. COUNSEL BEFORE US IS THAT THE PE OF ASSESSEE WA S IN FACT LIAISON OFFICE OF RRIL IN INDIA, WHICH IS SEPARATEL Y ASSESSED TO TAX IN INDIA AND ITS PROFIT AND TAXABILITY NOW HAS ATTAINED FINALITY IN THE FORM OF AGREEMENT UNDER MAP. IT WAS ALSO SUBMITTED THAT NOTWITHSTANDING WHETHER THERE IS ANY INDEPENDENT PE OF ASSESSEE IN INDIA OR NOT, BUT THE SAME ACTIVITIES ARISING FROM THE SAME SET OF FACTS AS AL LEGED BY THE REVENUE CANNOT GIVE RISE TO TWO PES, I.E., ONE PE F OR THE ASSESSE AND ANOTHER PE FOR RRIL. TO CANVASS THIS PO INT THE LD. COUNSEL HAS DRAWN OUR ATTENTION TO THE VARIOUS FIND INGS OF LD. CIT(A) IN THE CASE OF RRIL AND REMAND REPORT OF AO AS CONTAINED IN THE APPELLATE ORDER DATED 15.02.2009. HE HAS POINTED OUT THAT IN THE SAID ORDER THE LD. CIT(A) H AS RELIED UPON SAME CONTENTS OF REPORT OF SURVEY CONDUCTED AT THE LO OFFICE OF RRIL AND EXACTLY THE SAME MATERIAL HAS AG AIN BEEN USED IN THE CASE OF THE ASSESSEE ALSO; AND THEREFOR E, FOR THE SAME ACTIVITY THERE CANNOT BE TWO PES FOR TWO DIFFE RENT I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 16 ENTITIES. AS CULLED OUT FROM THE RECORDS, THE SURVE Y OF RRIL OFFICE IN INDIA HAD REVEALED CERTAIN FACTS WHICH HA S BEEN USED BY THE REVENUE AUTHORITIES FOR HOLDING THAT ROLLS R OYCE GROUP HAS A PE IN INDIA. THE CONTENTS OF THE SURVEY HAVE BEEN DISCUSSED BY THIS TRIBUNAL IN ITS ORDER AND HAVE RE ACHED TO THE FOLLOWING CONCLUSION:- IT CAN, THEREFORE, BE SUMMARIZED THAT IN THE LIGHT OF THE FACTS AS WELL AS DOCUMENT MENTIONED ABOVE, RRILS PRESENCE I N INDIA IS A PERMANENT ESTABLISHMENT OF APPELLANT BECAUSE: (A) IT IS A FIXED PLACE OF BUSINESS AT THE DISPOSAL OF THE ROLLS ROYCE PLC AND ITS GROUP COMPANIES IN INDIA THROUGH WHICH THEIR BUSINESS ARE CARRIED ON. (B) THE ACTIVITY OF THIS FIXED PLACE IS NOT A PREPARATO RY OR AUXILIARY, BUT IS A CORE ACTIVITY OF MARKETING, NEG OTIATING, SELLING OF THE PRODUCT. THIS IS A VIRTUAL EXTENSION /PROJECTION OF ITS CUSTOMER FACING BUSINESS UNIT, WHO HAS THE RESP ONSIBILITY TO SELL THE PRODUCTS BELONGING TO THE GROUP. (C) RRIL ACTS ALMOST LIKE A SALES OFFICE OF RR PLC AND ITS GROUP COMPANIES. (D) RRIL AND ITS EMPLOYEES WORK WHOLLY AND EXCLUSIVELY FOR THE ROLL ROYCE PLC AND THE GROUP. (E) RRIL AND ITS EMPLOYEES ARE SOLICITING AND RECEIVING ORDERS WHOLLY AND EXCLUSIVELY ON BEHALF OF THE ROLLS ROYCE GROUP. (F) EMPLOYEES OF ROLLS ROYCE GROUP ARE ALSO PRESENT IN VARIOUS LOCATIONS IN INDIA AND THEY REPORT TO THE DIRECTOR OF RRIL IN INDIA. I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 17 (G) THE PERSONNEL FUNCTIONING FROM THE PREMISES OF RRIL ARE IN FACT EMPLOYEES OF ROLLY ROYCE PLC. THIS HAS BEEN ADMITTE D BY THE MD. MR. TIM JONES, GM, AND CAN BE DISCERNED FROM ST ATEMENT OF MR. AJIT THOSAR AND DOCUMENTS LIKE TERMS OF EMPL OYMENT OF GMS. THUS, THE APPELLANT CAN BE SAID TO HAVE A PE IN IND IA WITHIN THE MEANING OF ARTICLE 5(1), 5(2) AND 5(4) OF THE INDO UK DTAA. SINCE WE HAVE FOUND THAT THE APPELLANT HAS A BUSINESS CON NECTION IN INDIA AS WELL AS PE IN INDIA THE INCOME ARISING FRO M ITS OPERATION IN INDIA ARE CHARGEABLE TO TAX IN INDIA. 11. SINCE THE FINDING OF FACT HAS BEEN ARRIVED ON T HE BASIS OF SAME DOCUMENTS, WE CANNOT SUBSCRIBE TO A DIFFERENT VIEW AND ACCORDINGLY, RESPECTFULLY FOLLOWING THE SAME, WE HO LD THAT ASSESSE DID HAVE A PE IN INDIA. 12. LASTLY, IN SO FAR ARGUMENT OF THE LD. COUNSEL OF THE ASSESSEE THAT NO FURTHER PROFIT ATTRIBUTION OF PE S HOULD BE MADE ONCE FOR THE SAME ACTIVITY, PROFIT ATTRIBUTION HAS BEEN AGREED UPON IN MAP, THEREFORE, NO SEPARATE ATTRIBUT ION CAN BE MADE IN THE HANDS OF THE ASSESSE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD. COUNSEL, BECAUSE THERE IS HUG E DIFFERENCE BETWEEN THE ACTIVITIES OF RRIL AND RRPL. THOUGH, SA ME SET OF MATERIAL AND DOCUMENTS HAVE LED THE REVENUE FOR HOL DING LO AS PE OF RRIL AND ALSO OF RRPL. BUT, IF THERE IS NO INTERLACING OF ACTIVITIES OF TWO ENTITIES, THEN ACTIVITY OF ONE ENTITY CANNOT RESULT INTO PE OF ANOTHER ENTITY, BECAUSE TO ESTABL ISH A PE THE BUSINESS CARRIED OUT BY A FOREIGN ENTITY ALONE SHOU LD BE TAKEN INTO CONSIDERATION. HERE IN THIS CASE IF IT HAS BEE N FOUND BY I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 18 THE TRIBUNAL THAT INDEPENDENTLY ALSO THE ACTIVITY O F ASSESSEE WAS SOMEHOW LINKED WITH LO, THEREFORE, NO INTERFERE NCE CAN BE MADE AND SINCE THIS ISSUE HAS BEEN DECIDED AGAIN ST THE ASSESSE WE DO NOT FIND ANY REASON TO GO INTO FURTHE R DEEP ANALYSIS AND FORM A DIFFERENT VIEW, BECAUSE THERE I S NO MATERIAL CHANGE IN FACTS AND CIRCUMSTANCES. RRIL AC TIVITIES WAS CARRYING OUT SALES AND MARKETING IN INDIA FOR R R INTERNATIONAL AND NOTHING HAS BEEN PRODUCED BEFORE US TO SHOW THAT THESE ACTIVITIES WERE ALSO ASSESSED AS BU SINESS PE ON A PROFIT SPLIT OR APPROPRIATE METHOD. THE RECORD SHOWS THAT RRIL WAS ASSESSED ONLY AS A DEPENDENT AGENT AND A S ERVICE PE ON THE COST PLUS MARGIN BASIS AND THEREFORE, IT CANNOT BE CONCLUDED THAT THE ATTRIBUTION OF PE IN INDIA IS FU LLY EXHAUSTED BY THE ASSESSMENT OF RRIL OR NOTHING REMA INED TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. ONCE THER E IS A FINDING THAT ACTIVITIES OF LO HAVE RESULTED IN PE I N INDIA, THEN TAX ATTRIBUTABLE TO SUCH ACTIVITY MUST BE BROUGHT T O TAX IN INDIA. IF ACTIVITIES GIVE RISE TO PE WHICH UNDERTAK ES MARKETING AND SALES IN INDIA THEN TAX ATTRIBUTION OF THE PE M UST BE MADE. HERE THE ATTRIBUTION IN THE HANDS OF RRIL WAS ONLY LIMITED TO COST PLUS BASIS, WHEREAS IN THE CASE OF THE ASSESSE THE PROFIT WHICH HAS BEEN ATTRIBUTED RELATES TO PUR ELY SALES OF ENGINES AND PARTS. FURTHER, NOTHING HAS BEEN BROUGH T BEFORE US THAT UNDER THE MAP AGREEMENT THE PROFIT ATTRIBUT ION OF SALES OF RRPL WERE ALSO SUBJECT MATTER OF CONSIDERA TION OR DISCUSSION AND THERE CANNOT BE ANY ASSUMPTION THAT THE I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 19 QUANTUM OF TAX AGREED IN THE CASE OF RRIL EXHAUSTS THE CONTRIBUTION OF PROFIT TO THE PE OF ASSESSE IN INDI A. 13. IN SO FAR AS ATTRIBUTION OF PROFIT IS CONCE RNED, WE ARE OF THE OPINION THAT SUCH A BLANKET ATTRIBUTION AS DONE BY THE AUTHORITIES BELOW DOES NOT SEEMS TO BE ON A SOUND F OOTING, ESPECIALLY WHEN THEY HAVE ALLEGED THAT COMMON ACTIV ITIES WERE CARRIED OUT FROM THE LO. THEN IN THAT CASE, IT WOUL D NOT POSSIBLE TO DISTINGUISH AS TO WHICH ACTIVITIES OF L O PERTAINS TO RRIL OR ACTIVITIES OF LO WERE UNDERTAKEN ON BEHALF OF THE ASSESSEE AND WHAT PART OF ACTIVITIES AT THE LO WHIC H ASSESSEE ITSELF WAS EXECUTING FOR ITS SALE. THAT BEING SO, T HEN OSTENSIBLY ATTRIBUTION OF THE PROFIT TO THE ACTIVITIES IN INDI A OF THE ASSESSEE LOGICALLY SHOULD BE DEDUCTED BY THE AMOUNT ATTRIBUTED TO RRIL. BUT WE DO NOT WISH TO GIVE ANY FINDING OR DIRECTION IN THIS REGARD AND WE STILL PERSUADED BY THE EARLIER YEARS PRECEDENCE, WHEREIN THE TRIBUNAL HAS SEPARATE LY ATTRIBUTED PROFITS IN THE HANDS OF THE ASSESSE COMP ANY WHEREIN THEY HAVE ADOPTED 35% OF THE PROFIT AS AGAI NST 75% OF THE GLOBAL PROFIT IN RESPECT OF SALES AFFECTED I N INDIA AS DONE BY AO. 14. BEFORE US, THE LD. COUNSEL HAS ALSO POINTED O UT SOME ERROR IN COMPUTATION, WHICH WE ARE AGREE NEEDS TO B E TAKEN INTO ACCOUNT WHILE DETERMINING THE TAXABLE PROFIT, WHICH IS SUMMARIZED AS BELOW: (I) IN THE APPLICATION OF THE TAX RATES PERTAINING TO R OYALTY AND INTEREST INCOME FOR THE AY 2006-07, THE RATE OF 20% HA S BEEN I.T.AS. NO.3839/DEL/2007, 3247/DEL/2014, 1205/DEL/2 015, 5167/DEL/2010 & 834/DEL/2014 20 APPLIED ERRONEOUSLY INSTEAD OF THE APPLICABLE RATE O F 15% AS PER THE PROVISIONS OF THE TREATY. (II) SINCE THE ASSESSEE IS A TAX RESIDENT OF THE UK AND IS ENTITLED TO CLAIM THE BENEFITS, IF ANY, AVAILABLE UNDER THE TREA TY, THE APPLICABLE RATE SHOULD BE 15%. AO HAS ERRED IN CHAR GING THE SAME @ 20% INSTEAD OF 15% AND THE DRP HAVE ERRED IN CONCURRING WITH THE SAME. (III) THE AO HAD INCORRECTLY CHARGED SURCHARGE @3% I NSTEAD OF APPLYING THE CORRECT RATE OF 2% IN THE ORDER FOR AY 20 06-07. THIS BEING AN INADVERTENT ERROR BY THE AO, THE SAME IS TO BE RECTIFIED. 15. ACCORDINGLY, WE HOLD THAT THE PROFITS TO BE TAX ED IN THE HANDS OF THE ASSESSEE IN THE ASSESSMENT YEARS IMPUG NED BEFORE US, SHOULD BE ATTRIBUTED AT 35%, INSTEAD OF 75% SUBJECT TO RECTIFICATION AS STATED ABOVE IN PARA 14 , WHICH SHOULD BE MADE IN THE COMPUTATION OF TAX FOR EACH O F THE ASSESSMENT YEARS. FURTHER, TAX ACTUALLY PAID BY THE ASSESSE FOR THESE YEARS SHOULD BE CREDITED FROM THE TAX LIA BILITY TO DETERMINE THE FINAL AMOUNT TO BE PAID OR REFUNDED T O THE ASSESSEE AS THE CASE MAY BE. 16. SINCE IN ALL THE APPEALS THIS IS THE ONLY I SSUE, THEREFORE OUR FINDING WILL APPLY MUTATIS MUTANDIS FOR ALL THE YEARS. ACCORDINGLY, THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY, 2019. SD/- SD/- [L.P. SAHU] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28.05.2019