ADIT, New Delhi V. M/s. Lucent Technologies International Inc., New Delhi

ITA 211/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6388 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-02-2015
• Assessment Year: 1997-1998
• Appeal Filed On: 13-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV SHARMA
• Assessee Lawyers: ARVIND RAJAN CAS
• Keywords: Business income; Double taxation relief; Permanent establishment
• Section: 133A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM ITA NO.211/DEL/2012 ASSESSMENT YEAR : 1997-98 ADIT, CIRCLE 1(1), INTERNATIONAL TAXATION, 204, DRUM SHAPED BUILDING, IP ESTATE, NEW DELHI. VS. LUCENT TECHNOLOGIES INTERNATIONAL INC., C/O PRICEWATERHOUSE COOPERS, SUCHETA BHAWAN, 11-A, VISHNU DIGAMBER MARG, NEW DELHI. PAN : AAHCA6277H ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI PAWAN KUMAR & SHRI ARVIND RAJAN, CAS DEPARTMENT BY : S HRI S ANJEEV SHARMA, DR ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE EMANATES FROM THE ORDER PASSED BY THE CIT(A) ON 30.09.2011 IN RELATION TO THE ASSE SSMENT YEAR 1997-98. 2. THE SOLITARY EFFECTIVE GROUND PROJECTS THE GRIEV ANCE OF THE REVENUE AS UNDER :- ITA NO.211/DEL/2012 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(APPEAL) HAS ERRED HOLDING THAT THE ASSESSEES ASSISTANCE TO M/S LUCENT TECHNOLOGIES IN DIA LTD. IN CONNECTION WITH SERVICES OF INSTALLATION, COMMISSIONING, TESTING, ETC. OF THE HARDWARE AND SOFTWARE CONSTITUTES ONLY SERVICE PE AND FURTHER DETERMINING THE PROFITS ATTRIBUTABLE TO THE INDIAN PE OF THE ASSESSEE AT THE RATE OF 2.5% OF THE TOTAL TURNO VER FOR THE RELEVANT YEAR. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THA T THE ASSESSEE IS A COMPANY INCORPORATED IN USA. IT IS A LEADING SUPPL IER OF HARDWARE AND SOFTWARE PRODUCTS FOR GSM CELLULAR RADIO TELEPH ONE SYSTEM. THE ASSESSEE SUPPLIED TELECOMMUNICATION HARDWARE AN D SOFTWARE TO CUSTOMERS IN INDIA. NO RETURN OF INCOME WAS FUR NISHED BY THE ASSESSEE FOR THE YEAR IN QUESTION. ON PERUSAL OF C ONTRACT SIGNED BETWEEN THE ASSESSEE AND VARIOUS CUSTOMERS, THE AO OPINED THAT THE ASSESSEE WAS CHARGEABLE TO TAX IN INDIA. NOTIC E WAS ISSUED TO THE ASSESSEE TO FILE RETURN BUT WITHOUT SUCCESS. TH E AO ISSUED AND SERVED NOTICE ON ITS INDIAN SUBSIDIARY IN VIEW OF T HE FACT THAT AS PER THE TERMS OF CONTRACT BETWEEN THE ASSESSEE AND ESCOTEL MOBILE COMMUNICATION LTD., THE NOTICE WAS TO BE SEN T TO AT & T INDIA PRIVATE LTD., SUBSEQUENTLY RENAMED AS LUCENT TECHNOLOGIES INDIA LTD. (LTIL). ONCE AGAIN NOTICE WAS SENT TO T HE ASSESSEE. IN THE ABSENCE OF ANY CO-OPERATION COMING FROM THE SID E OF THE ITA NO.211/DEL/2012 3 ASSESSEE, THE AO FINALIZED ASSESSMENT U/S 144 OF TH E INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) ON T HE BASIS OF MATERIAL ON RECORD. IN THIS ASSESSMENT ORDER, THE AO OBSERVED THAT THE ASSESSEE ENTERED INTO CONTRACT WITH ESCOTE L MOBILE COMMUNICATION LTD. FOR GSM CELLULAR AND TATA BELL C ANADA LTD. FOR BASIC SERVICES IN ANDHRA PRADESH. IN ORDER TO DO THESE ACTIVITIES, THE ASSESSEE SENT ITS EMPLOYEES TO INDI A FOR CONDUCTING NETWORK SURVEY AND UNDERTAKING NEGOTIATIONS. THE C ONTRACT FOR SUPPLY OF HARDWARE AND SOFTWARE WAS SIGNED IN INDIA BY MR. DON GREEN FOR AND ON BEHALF OF THE ASSESSEE COMPANY. T HE INSTALLATION CONTRACT WAS SIGNED BETWEEN THE INDIAN COMPANY AND CUSTOMERS. THE AFTER-SALES SERVICES WERE ALSO TO B E CARRIED OUT BY THE INDIAN COMPANY. THE AO OBSERVED THAT THE ASSES SEE EARNED PROFIT ON SUPPLY OF HARDWARE AND SOFTWARE, WHICH WA S CHARGEABLE TO TAX IN INDIA. HE HELD THAT THE PROFIT ON SUPPLY OF HARDWARE WAS TAXABLE AS PER ARTICLE 7 READ WITH ARTICLE 5 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND USA (HEREINAF TER ALSO CALLED THE DTAA) AND THE PROFIT ON SUPPLY OF SOF TWARE AND DOCUMENTATION TAXABLE AS ROYALTY AS PER ARTICLE 1 2 OF THE DTAA. THE AO FURTHER HELD THAT THE ASSESSEE HAS A PERMANE NT ITA NO.211/DEL/2012 4 ESTABLISHMENT IN INDIA BY VIRTUE OF FIXED PLACE OF BUSINESS IN THE FORM OF OFFICE OF ITS INDIAN SUBSIDIARY; SERVICE P E IN THE FORM OF EMPLOYEES OF THE ASSESSEE COMPANY COMING TO INDIA A ND STAYING HERE FOR A LONG TIME; AND ALSO DEPENDENT AGENT PE IN INDIA IN THE FORM OF LTIL. TAKING INTO CONSIDERATION ALL THE RE LEVANT FACTORS AND WITHOUT ANY SUPPORT FROM THE ASSESSEE, THE AO COMPUTED THE TOTAL INCOME U/S 144 OF THE ACT BY CONSIDERING 70% OF TOTAL RECEIPTS AS ATTRIBUTABLE TO HARDWARE SUPPLIED, LIAB LE TO TAX AS BUSINESS PROFITS AFTER DEDUCTION AT 60% TOWARDS E XPENSES, AT THE RATE OF 55%. THE REMAINING AMOUNT OF 30% OF TOTAL RECEIPTS WAS CONSIDERED AS TOWARDS SOFTWARE SUPPLIED, LIABLE TO TAX AS FEES FOR TECHNICAL SERVICES. WHEN THE MATTER WENT BEFORE TH E LD. CIT(A), HE HELD THAT THERE WAS NO PE OF THE ASSESSEE IN IND IA AND, HENCE, INCOME FROM HARDWARE WAS NOT CHARGEABLE TO TAX. HE , HOWEVER, UPHELD THE TAXABILITY OF INCOME FROM SOFTWARE AS RO YALTY. BOTH THE SIDES APPEALED BEFORE THE TRIBUNAL. VIDE ORDER DATED 19.12.2008, A COPY OF WHICH IS AVAILABLE ON PAGES 7 6 ONWARDS OF THE ASSESSEES PAPER BOOK, THE TRIBUNAL HELD THAT L TIL CONSTITUTED A SERVICE PE OF THE ASSESSEE. RELYING ON THE SPECI AL BENCH ORDER IN THE CASE OF MOTOROLA, THE TRIBUNAL HELD THAT THE AMOUNT ITA NO.211/DEL/2012 5 CHARGED TO TAX AS ROYALTY TOWARDS SUPPLY OF SOFTWAR E SHOULD ALSO BE CONSIDERED AS BUSINESS PROFITS OF THE ASSESSEE COMPANY ALONG WITH THE INCOME FROM SUPPLY OF HARDWARE. WHI LE GIVING EFFECT TO THE TRIBUNAL ORDER, THE AO, VIDE HIS ORDE R DATED 9.10.2009, CAME TO HOLD THAT TOTAL VALUE OF HARDWAR E AND SOFTWARE SUPPLIES AMOUNTING TO ` 230.66 CRORE WAS ATTRIBUTABLE TO THE SERVICE PE OF THE ASSESSEE IN INDIA. AFTER ALL OWING DEDUCTION FOR EXPENSES @ 60%, AS DONE ORIGINALLY, HE COMPUTED TOTAL BUSINESS INCOME AT ` 92.26 CRORE ON WHICH TAX RATE OF 55% WAS APPLIED. THE ASSESSEE OBJECTED TO THE SAID ORDER P ASSED BY THE AO BY CONTENDING BEFORE THE HONBLE DELHI HIGH COUR T THAT THE AO DID NOT GIVE ANY OPPORTUNITY OF HEARING BEFORE PASS ING THIS ORDER. THE HONBLE HIGH COURT SET ASIDE THIS ORDER PASSED BY THE AO AND REMITTED THE MATTER TO HIM FOR PASSING A FRESH ORDE R AFTER GRANTING AN OPPORTUNITY OF HEARING. A FRESH ORDER WAS PASSE D BY THE AO ON 29.3.10, A COPY OF WHICH IS AVAILABLE ON PAGE 127 O F THE PAPER BOOK, REPEATING THE VIEW TAKEN BY HIM IN HIS EARLIE R ORDER AND COMPUTING THE SAME INCOME. THE ASSESSEE APPEALED B EFORE THE LD. CIT(A) AGAINST THIS ORDER. VIDE THE IMPUGNED OR DER, THE LD. CIT(A) HELD THAT THE ASSESSEE HAS A SERVICE PE IN I NDIA AS WAS ITA NO.211/DEL/2012 6 DIRECTED BY THE TRIBUNAL. ON THE QUESTION OF ATTRI BUTION OF INCOME, THE LD. CIT(A) HELD THAT 2.5% OF THE SALES MADE BY THE OVERSEAS ENTITIES IN INDIA SHOULD BE CONSIDERED AS ASSESSEES TOTAL INCOME. THIS RATE OF 2.5% WAS APPLIED ON THE BASIS OF SURVEY PROCEEDINGS TAKEN UP U/S 133A IN THE YEAR 2007 AGAI NST CERTAIN GROUP ENTITIES OF THE ASSESSEE COMPANY, IN WHICH TH E AO FINALLY DETERMINED NET INCOME ATTRIBUTABLE TO THE PE IN IND IA AT 2.5% OF THE SALES MADE BY THE OVERSEAS ENTITIES IN INDIA. 4. THE REVENUE IN THE PRESENT APPEAL IS AGGRIEVE D ON TWO ISSUES, NAMELY, I) THE DIRECTION OF THE LD. CIT(A) TO HOLD LTIL AS SERVICE PE OF THE ASSESSEE IN INDIA; AND II) ATTRI BUTION OF INCOME TO THE INDIAN PE @ 2.5% OF THE TOTAL TURNOVER. WE WILL DEAL WITH BOTH THE ISSUES ONE BY ONE. I. I. I. I. S SS SERVICE ERVICE ERVICE ERVICE P PP P. .. .E EE E. .. . 5. THE LD. DR VEHEMENTLY ARGUED THAT THE LD. CIT(A) FELL IN ERROR BY HOLDING THAT LTIL CONSTITUTED SERVICE PE OF THE ASSESSEE IN INDIA ON THE BASIS OF THE TRIBUNAL ORDER. IT WAS S UBMITTED THAT THE TRIBUNAL NOWHERE RENDERED A FINDING THAT LTIL SHOUL D BE CONSIDERED AS SERVICE PE ALONE. HE STATED THAT THE AO HELD LTIL ITA NO.211/DEL/2012 7 TO BE SERVICE PE ON SEVERAL SCORES, SUCH AS, FIXED PLACE; DEPENDENT AGENT; INSTALLATION PE; AND SERVICE PE. I T WAS ARGUED THAT LTIL SHOULD BE CONSIDERED AS PE OF THE ASSESSE E FROM ALL THESE ANGLES AS WAS HELD BY THE AO IN THE ORIGINAL ASSESSMENT, INSTEAD OF HOLDING IT TO BE SERVICE PE ALONE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE RELEVANT MATERIAL ON RECORD. THE REASON FOR THE REV ENUE TO AGITATE THAT THE LTIL SHOULD BE HELD NOT ONLY AS SE RVICE PE OF THE ASSESSEE BUT ALSO FIXED PLACE, DEPENDENT AGENT AND INSTALLATION PE IS TO EXPAND THE SCOPE OF THE PERMANENT ESTABLIS HMENT OF THE ASSESSEE IN INDIA SO THAT HIGHER PROFITS COULD BE A TTRIBUTED TO IT. IT GOES WITHOUT SAYING THAT LARGER THE SCOPE OF THE PE , MORE IS THE PROFIT ATTRIBUTION. 7. IT IS RELEVANT TO NOTE THAT THE PRESENT PROCEE DINGS ARE FLOWING OUT OF THE ORDER PASSED BY THE TRIBUNAL IN THE FIRS T ROUND ON 19.12.2008. IN THIS ORDER, THE TRIBUNAL NOTED THE FACTS AS RECORDED BY THE AO IN WHICH HE HELD THE ASSESSEE TO HAVE A FIXED PLACE PE, DEPENDENT AGENT PE AND SERVICE PE IN INDI A. THEREAFTER, IT OBSERVED THAT ASSESSEE ENTERED INTO CONTRACT WI TH ESCOTEL FOR ITA NO.211/DEL/2012 8 SUPPLY OF HARDWARE AND SOFTWARE FOR TURNKEY PROJECT OF GSM NETWORK IN INDIA AND AT THE SAME TIME LTIL ENTERED INTO CONTRACT WITH ESCOTEL FOR COMMISSIONING, INSTALLATION AND OP ERATION OF SAID TURNKEY PROJECT. AS BOTH WERE INDIVIDUALLY AND SEV ERALLY RESPONSIBLE FOR COMPLETION OF JOBS UNDER THE CONTRA CTS AND ASSESSEE, INTER ALIA , SUPPLIED EXPATRIATES WHO WERE EMPLOYEES OF ITS AFFILIATES FOR HELPING LTIL IN COMPLETING ITS J OB, WHICH EMPLOYEES REMAINED IN INDIA FOR MORE THAN 90 DAYS I N THE RELEVANT FINANCIAL YEAR, LTIL CONSTITUTED SERVICE P E OF THE ASSESSEE IN INDIA AS PER ART. 5(2)(L)(I) OF THE DTAA. IT WA S FINALLY HELD THAT : CONSEQUENTLY, IT WOULD HAVE TO BE HELD THAT LTIL I N FACT WAS A SERVICE PE OF THE ASSESSEE. 8. HERE, IT IS IMPERATIVE TO MENTION THAT THE ASSES SEE FILED MISCELLANEOUS APPLICATION AGAINST THIS ORDER PASSED BY THE TRIBUNAL URGING THAT THERE WAS NO SERVICE PE AT ALL IN INDIA. THIS MISC. APPLICATION CAME TO BE DISMISSED BY THE TRIBU NAL VIDE ITS ORDER DATED 21.08.2009. IT SHOWS THAT THE TRIBUNAL HELD IN ITS ORDER U/S 254(1) THAT LTIL WAS A SERVICE PE OF THE ASSESSEE IN INDIA AND THE DISMISSAL OF THE ASSESSEES MISCELLAN EOUS APPLICATION GAVE FINALITY TO ITS VIEW THAT LTIL CON STITUTED SERVICE ITA NO.211/DEL/2012 9 PE OF THE ASSESSEE IN INDIA. NO MISCELLANEOUS APPL ICATION WAS FILED BY THE REVENUE ADVOCATING THAT LTIL BE CONSID ERED NOT ONLY AS A SERVICE PE BUT ALSO FIXED PLACE, DEPENDENT AGE NT AND INSTALLATION PE. IT IS INTERESTING TO NOTE THAT TH E REVENUE APPEALED AGAINST THIS ORDER OF THE TRIBUNAL PASSED U/S 254(1 ) OF THE ACT BUT ONLY ON THE POINT OF INTEREST. THE QUESTION AS TO WHETHER LTIL CONSTITUTED ONLY SERVICE PE OF THE ASSESSEE IN INDI A, WAS NOT APPEALED BEFORE THE HONBLE DELHI HIGH COURT. THIS LEADS US TO AN IRRESISTIBLE CONCLUSION THAT THE TRIBUNAL HELD LTIL TO BE THE SERVICE PE OF THE ASSESSEE IN INDIA. THE CONTENTION OF THE DEPARTMENT THROUGH THE INSTANT APPEAL THAT LTIL SHOULD BE CONS IDERED AS PE ON THE BASIS OF FIXED PLACE, INSTALLATION AND DEPEN DENT AGENT AS WELL, DOES NOT MERIT ACCEPTANCE. IF THE REVENUE W AS AGGRIEVED AGAINST THE ORDER PASSED BY THE TRIBUNAL HOLDING LT IL TO BE THE SERVICE PE OF THE ASSESSEE IN INDIA, IT OUGHT TO HA VE CHALLENGED THE SAME BEFORE THE HONBLE HIGH COURT OR HAVE GOT IT MODIFIED THROUGH MISCELLANEOUS APPLICATION. HAVING NEITHER F ILED ANY MA NOR RAISED THIS ISSUE BEFORE THE HONBLE HIGH COURT , NOTWITHSTANDING THE FACT THAT IT FILED APPEAL AGAIN ST THE TRIBUNAL ORDER, THE NATURAL CONSEQUENCE WHICH FOLLOWS IS THA T THE FINDING ITA NO.211/DEL/2012 10 GIVEN BY THE TRIBUNAL AS TO LTIL CONSTITUTING SERVI CE PE OF THE ASSESSEE STOOD ACCEPTED BY THE REVENUE. AS SUCH, I T HAS BECOME TOO LATE IN THE DAY TO AGITATE IN THE PRESENT PROCE EDINGS THAT THE VIEW TAKEN BY THE TRIBUNAL IN THE FIRST ROUND SHOUL D BE ALTERED, WHICH, IN FACT, HAS ATTAINED FINALITY. WE, THEREF ORE, HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN COMING TO THE CONCLUSIO N THAT LTIL CONSTITUTED ONLY SERVICE PE OF THE ASSESSEE IN INDI A. II. II. II. II. ATTRIBUTION OF INCOME ATTRIBUTION OF INCOME ATTRIBUTION OF INCOME ATTRIBUTION OF INCOME 9. AS CAN BE NOTICED FROM THE FACTS RECORDED ABOVE THAT THE AO ATTRIBUTED ENTIRE TRANSACTION OF SUPPLY OF HARDWARE AND SOFTWARE TO THE PE OF THE ASSESSEE IN INDIA. THAT IS HOW HE COMPUTED INCOME AT ` 92.26 CRORE. BUSINESS PROFITS UNDER ARTICLE 7 O F THE DTAA CAN BE COMPUTED TO THE EXTENT OF THE BUSINESS CARRIED ON BY THE ENTERPRISE OF ONE CONTRACTING STATE IN THE O THER CONTRACTING STATE THROUGH A PERMANENT ESTABLISHMENT SITUATED TH EREIN. IT IS ONLY IF THE ENTERPRISE CARRIES ON THE BUSINESS AS A FORESAID, THAT THE PROFITS OF THE ENTERPRISE MAY BE TAXED IN OTHER STA TE, BUT ONLY SO MUCH OF THEM AS ARE DIRECTLY OR INDIRECTLY ATTRIBUT ABLE TO THAT PERMANENT ESTABLISHMENT. THE CRUX OF THE MATTER IS THAT ONLY ITA NO.211/DEL/2012 11 THAT MUCH OF THE PROFITS CAN BE INCLUDED IN THE TOT AL INCOME OF THE FOREIGN ENTERPRISE WHICH ARE ATTRIBUTABLE TO THE BU SINESS CARRIED ON BY IT IN INDIA THROUGH ITS PERMANENT ESTABLISHME NT. IF THERE ARE CERTAIN ACTIVITIES OF THE ENTERPRISE IN INDIA IN WH ICH THE PE HAS NO DIRECT OR INDIRECT ROLE TO PLAY, OBVIOUSLY, THE INC OME RESULTING FROM SUCH ACTIVITIES CANNOT BE INCLUDED IN THE BUSINESS PROFITS OF THE FOREIGN ENTERPRISE. IT IS ONLY IN RELATION TO THE A CTIVITIES THAT ARE CARRIED ON BY THE FOREIGN ENTERPRISE IN INDIA DIREC TLY OR INDIRECTLY THROUGH ITS PE, THAT THE BUSINESS PROFITS BECOME CHARGEABLE TO TAX IN INDIA. 10. IT CAN BE NOTICED FROM THE FACTS RECORDED AB OVE THAT THE AO ATTRIBUTED 100% OF THE TRANSACTIONS CARRIED OUT IN INDIA TO THE PERMANENT ESTABLISHMENT. THE ACTIVITIES OF THE ASS ESSEE IN INDIA CAN BE BROADLY CLASSIFIED INTO SUPPLY OF HARDWARE AND SOFTWARE EMBEDDED IN THE HARDWARE; AND COMMISSIONING, INSTAL LATION AND OPERATION OF SAID TURNKEY PROJECT. IN SO FAR AS THE SUPPLY OF HARDWARE IS CONCERNED, THE SAME WAS ADMITTEDLY CARR IED OUT BY THE ASSESSEE WITHOUT THE INVOLVEMENT OF ANY SERVICE PE IN INDIA. IT IS BUT NATURAL THAT SERVICE PE WOULD COME INTO P LAY ONLY WHEN THE EQUIPMENT ITSELF IS SUPPLIED. IN THAT VIEW OF THE MATTER, IT IS ITA NO.211/DEL/2012 12 TOTALLY ILLOGICAL TO HOLD THAT ENTIRE SALE TRANSACT ION OF THE ASSESSEE IN INDIA WAS ATTRIBUTABLE TO THE SERVICE PERMANENT ESTABLISHMENT IN INDIA. THE EMPLOYEES OF THE ASSESSEE ASSISTED LT IL IN CONNECTION WITH THE SERVICE OF INSTALLATION, COMMIS SIONING, TESTING AND BRINGING OF OPERATION OF HARDWARE AND SOFTWARE SOLD BY THE ASSESSEE TO ESCOTEL. IN THAT VIEW OF THE MATTER, O NLY THE INCOME ATTRIBUTABLE TO THE ACTIVITIES CARRIED OUT IN INDIA BY THE ASSESSEE THROUGH ITS PERMANENT ESTABLISHMENT, CAN BE BROUGHT WITHIN THE AMBIT OF BUSINESS PROFITS. 11. IT CAN BE SEEN THAT SURVEY PROCEEDINGS WERE TAKEN UP AGAINST CERTAIN GROUP ENTITIES OF THE ASSESSEE IN 2 007. THE DEPARTMENT MADE OUT A CASE THAT THESE CONSTITUTED P E IN INDIA. THE AO, AFTER HOLDING THAT THERE WAS NOT ONLY SERVI CE PE, BUT ALSO FIXED PLACE PE ETC. IN INDIA, FINALIZED THE ASSESS MENT BY ATTRIBUTING INCOME TO THE PE IN INDIA AT THE RATE OF 2.5% OF THE SALES MADE BY THE OVERSEAS ENTITIES IN INDIA. SUCH ATTRIBUTION OF INCOME WAS ACCEPTED BY THE ASSESSEE AS WELL WITHOUT FILING ANY FURTHER APPEALS ON THIS SCORE. NOW, WE ARE CONFRON TED WITH A SITUATION IN WHICH THERE IS A PROFIT ATTRIBUTION BY THE REVENUE ITSELF TO THE PE IN INDIA AT THE RATE OF 2.5% OF THE SALES MADE BY THE ITA NO.211/DEL/2012 13 OVERSEAS ENTITIES IN INDIA ON ONE HAND, AND ON THE OTHER HAND, THE REVENUE HAS BROUGHT NO MATERIAL ON RECORD TO DEMONS TRATE ANY MECHANISM FOR ATTRIBUTING INCOME TO THE ASSESSEES PE IN INDIA. IN OUR CONSIDERED OPINION, THE VIEW TAKEN BY THE RE VENUE ITSELF IN SUBSEQUENT YEARS FOR ATTRIBUTING 2.5% OF THE SALES MADE BY THE OVERSEAS ENTITIES IN INDIA AS ATTRIBUTABLE TO THE P E, CONSTITUTES A GOOD BASIS FOR ADOPTION. AS THE LD. CIT(A) HAS FOL LOWED THE SAME, WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED ORD ER ON THIS ISSUE. 12. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 04.07.201 4. SD/- SD/- [ C.M. GARG ] [ R.S. SYAL ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 04 TH JULY, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.