VARIAN INDIA P. LTD- INDIA BRANCH, MUMBAI V. ADDL CIT (IT) RG 2, MUMBAI

ITA 8950/MUM/2010

• Counselvise Citation: 895019914 RSA 2010
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 05-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 22-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEERAJA PRADHAN
• Assessee Lawyers: DHANESH BAFNA
• Keywords: Double taxation relief; Permanent establishment; Wholly owned subsidiary
• Section: 144; 234B

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNALL BENCH, MUMB AI . .. . . .. . , ,, , ! ! ! ! , ' ' ' ' # $ % # $ % # $ % # $ %, ,, , & ! & ! & ! & ! ' ' ' ' BEFORE SHRI P. M. JAGTAP, AM AND SHRI AMIT SHUKLA, JM ITA NO. 8950/MUM/2010 ASSESSMENT YEAR-2007-08 VARIAN INDIA PRIVATE LIMITED- INDIA BRANCH, 205, GALLERIA BUILDING, A WINGH, 2 ND FLOOR, HIRANANDANI GARDENS, POWAI, MUMBAI-400076 ( ( ( ( / VS. ADDL. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) RG.2, MUMBAI. !) ./ PAN :AAAV3294Q ( )* / APPELLANT ) .. ( +,)* / RESPONDENT ) )* - . / ASSESSEE BY : SHRI DHANESH BAFNA !' - . / REVENUE BY : SMT. NEERAJA PRADHAN (' - / DATE OF HEARING : 24/02/2014 /01 - / DATE OF PRONOUNCEMENT : 28/02/2014 $ $ $ $ / ORDER # $ % # $ % # $ % # $ %, ,, , & ! & ! & ! & ! 2 2 2 2 / PER AMIT SHUKLA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE FINAL ASSESSMENT ORDER DATED 27/10/10 PASSED IN PURSUANCE OF DIRECTION GIVEN BY THE DISPUTE RESOLUTION PANEL (DRP) U/S 144 C FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL TO CHALLENGE THE IMPUGNED ASSESSMENT ORDER. GROUND NO. 1 - ADDITION OF RS.84,I0,831 ON ACCOUNT OF INCLUSION OF REIMBURSEMENT OF EXPENSES FOR THE PURPOSE OF COMPUTING COMMISSION INCOME 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ADDITIONAL DIRECTOR OF INCOME-TAX (INTERNATIONAL TAXATION), RANGE 2, MUMBA I (HEREINAFTER REFERRED TO AS THE LEARNED AO) ERRED IN INCLUDING THE AMOUNT OF REIMBU RSEMENT OF EXPENSES RECEIVED BY THE APPELLANT (OF RS,1,58,37,595) FOR THE PURPOSES OF COMPUTING THE COMMISSION INCOME, AND THEREBY, MAKING AN ADDITION OF RS.84,1O ,831 TO THE TOTAL INCOME OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. 2 ITA NO.8950/MUM/2012 M/S VARIAN INDIA PVT. LTD. THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO DELE TE THE ADDITION OF RS.84,1O,831. GROUND NO. 2 ADDITION OF RS.10.80.117 ON ACCOUNT O F ATTRIBUTION OF PROFITS TO PERMANENT ESTABLISHMENT (PE ) 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED AO ERRED IN CONCLUDING THAT THE APPELLANT CONSTITUTES A PERMANE NT ESTABLISHMENT (HEREINAFTER REFERRED TO AS PE) OF VARIAN ITALY IN INDIA. THE APPELLANT PRAYS THAT THE AO BE DIRECTED ACCORDI NGLY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED AO ERRED IN INCORRECTLY INTERPRETING THE FORCE OF ATTRACTION RULE UNDER ARTICLE 7(1 )(B) AND (C) OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN IND IA AND ITALY AND IN CONCLUDING THAT PROFITS ATTRIBUTABLE TO THE SALES MADE BY VARI AN ITALY TO ITS INDIAN CUSTOMERS ARE LIABLE TO BE TAXED IN INDIA. THE APPELLANT PRAYS THAT THE AO BE DIRECTED ACCORDI NGLY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED AO ERRED IN CONCLUDING THAT AN AMOUNT OF RS.1O,80,117, BEING 10 % OF THE GROSS SALES MADE BY VARIAN ITALY TO ITS CUSTOMERS IN INDIA, BE TAXED IN THE HANDS OF THE APPELLANT AS PROFITS ATTRIBUTABLE TO THE PE OF VARIAN ITALY, AS PER RULE 10 OF THE INCOME-TAX RULES, 1962. THE APPELLANT PRAYS THAT THE AO BE DIRECTED ACCORDI NGLY. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW! THE LEARNED AO ERRED IN DISREGARDING THE APPELLANTS SUBMISSION THAT WITHOU T PREJUDICE TO THE ABOVE, EVEN IF THE APPELLANT IS CONSIDERED TO BE PE OF VARIAN ITAL Y, THE APPELLANT HAS BEEN COMPENSATED ON AN ARMS LENGTH BASIS (AS PER THE TR ANSFER PRICING REPORT PREPARED BY INDEPENDENT PROFESSIONAL CONSULTANTS) FOR THE ACTIV ITIES/FUNCTIONS CARRIED OUT BY THE APPELLANT / RISKS ASSUMED, AND AS SUCH THERE SHOULD NOT BE ANY FURTHER ATTRIBUTION OF INCOME/PROFITS. THE APPELLANT PRAYS THAT THE AO BE DIRECTED ACCORDI NGLY. GROUND NO. 3LEVY OF INTEREST UNDER SECTION 234B OF THE ACT OF RS.19.63.694 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED AO HAS ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT. THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO DELE TE THE INTEREST UNDER SECTION 234B OF THE ACT. 3. BRIEF FACTS QUA THE ISSUE RAISED IN GROUND NO.1 ARE THAT THE ASSESSEE IS A BRANCH OF VARIAN INDIA PRIVATE LTD., WHICH IN TURN IS A 100% SUBSIDIARY VARIAN INC. USA. THE VARIAN GROUP OF COMPANIES HAVE VARIOUS OVERSEAS ENTITIES, WHICH HAVE BEEN HER ETO REFERRED AS VARIAN GROUP OF COMPANIES (VGCS). THE ASSESSEE COM PANY IS MAINLY ENGAGED IN THE BUSINESS OF TRADING IN ANALYT ICAL EQUIPMENT, 3 ITA NO.8950/MUM/2012 M/S VARIAN INDIA PVT. LTD. LABORATORY EQUIPMENTS AND VARIOUS OTHER PRODUCTS WH ICH ARE MANUFACTURED BY THE VARIAN INC. USA AND OTHER VGCS. THE ASSESSEE HAS ENTERED INTO DISTRIBUTION AND REPRESEN TATION AGREEMENT WITH THE VARIOUS VGCS FOR SALE OF PRODUCTS IN INDIA . DURING THE YEAR THE ASSESSEE HAS EARNED FOLLOWING INCOME FROM COMMI SSION FROM ITS AE (IE VGCS):- 1) VARIAN BV-NETHERLANDS RS. 7,95,40,784/- 2) VARIAN-GERMANY RS. 68,47,897/- 3) VARIAN SPA- ITALY RS. 1,06,79,697/- TOTAL- RS.9,70,68,379/- 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTED THAT, AS PER FROM 3CEB REPO RT, THE ASSESSEE HAS RECEIVED MONEY FROM VARIAN BV NETHERLANDS, VARI AN GERMANY, VARIAN SPA- ITALY BY WAY OF REIMBURSEMENT EXPENSES WHICH WERE AS UNDER:- SR. NO. NAME OF ENTITY MAKING REIMBURSEMENTS AMOUNT OF REIMBURSEMENTS IN RS. 1. VARIAN BV - NETHERLANDS 2,51,48,510 2. VARIAN - GERMANY 13,97,784 3. VARIAN SPA ITALY 1,21,472 TOTAL 2,66,67,766 THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FUR NISH THE DETAILS OF REIMBURSEMENT AND SINCE THE ASSESSEE IS RECEVING COMMISSION INCOME ON GROSS SALES AND ALSO ON THE AD DITIONAL COST FORMING PART OF TOTAL SALE AND CONTRACT VALUE, THRE FORE, WHETHER THE AMOUNT OF REIMBURSEMENT BEING INCLUDED IN THE GROSS SALES FOR THE PURPOSE OF A CALCULATION OF COMMISSION INCOME OR NO T. IN RESPONSE, THE ASSESSEE SUBMITTED THE DETAILS SHOWING ITEM WIS E 4 ITA NO.8950/MUM/2012 M/S VARIAN INDIA PVT. LTD. REIMBURSEMENT AND IN THE NARRATION GIVEN THEREIN, IT WAS MENTIONED THAT THE REIMBURSEMENT OF EXPENSES ARE ON ACCOUNT OF PURCHASE OF ADDITIONAL MATERIALS/EQUIPMENTS IN INDI A FOR THE MAIN INSTRUMENT. IT WAS FURTHER CLARIFIED AS UNDER:- THE ASSESSEE SUBMITTS THAT THE REIMBURSEMENT OF EXP ENSES IS A PURE REIMBURSEMENT OF EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF THE VARIAN GROUP ENTITIES (VCGS). THE ASSESSEE DEBIT ED ITS FINANCIAL ACCOUNTS WITH THE EXPENSES INCURRED ON BEHALF OF VG CS. SUBSEQUENTLY, ON RECEIPT OF THE CREDIT NOTE FROM VG CS, THE ASSESSEE CREDITED IT UNDER THE HEAD OTHER INCOME IN ITS FI NANCIAL ACCOUNTS. YOUR GOODSELF WILL APPRECIATE THAT SINCE THE SAME I S IN THE NATURE OF PURE REIMBURSEMENT, THE SAME IS NOT INCLUDED FOR TH E PURPOSES OF CALCULATION OF COMMISSION. 5. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSE ES CONTENTION ON THE GROUND THAT CONTRACT WHICH HAS BEEN ENTERED INTO WITH THE PRINCIPAL COMPANIES AND THE CUSTOMER IN INDIA, INC LUDE THE ENTIRE PACAKAGE I.E., IT IS NOT ONLY THE MAIN EQUIPMENT BU T ALSO ALL ADDITIONAL EQUIPMENTS WHICH MAY BE ANCILLARY TO THE SAME. THE CONTRACT VALUE IS THE GROSS SALES CONSIDERATION WH ICH HAS BEEN NEGOTIATED WITH THE CUSTOMER AND WHICH HAS ACTUALLY BEEN PAID TO THE PRINCIPALS. THE FACT THAT THESE ADDITIONAL SUP PLIES HAVE BEEN MADE BY THE INDIAN ENTITY AND FOR WHICH IT IS REIMB URSED AT COST, WILL NOT ALTER THE FACT THAT THE REIMBURSED AMOUNT FORM PART OF THE GROSS SALES CONSIDERATION AND THUS HAVE TO BE TAKEN INTO ACCOUNT FOR THE CALCULATION OF THE SALES COMMISSION TO BE RECE IVED BY THE INDIAN ENTITY. HE ALSO ANALYSED THE DISTRIBUTION AND REPR ESENTATION AGREEMENT BETWEEN VARIAN ITALY AND THE ASSESSEE. F ROM THIS AGREEMENT HE CONCLUDED THAT THE COMMISSION IS TO BE CALCULATED ON THE BASIS OF ACHIEVED/QUOTED PRICE, LESS THE DISCO UNT AND THE ASSESSEE WAS REQUIRED TO RECEIVE THE COMMISSION FRO M THE SUPPLY OF THESE PARTS ALSO OBTAINED FROM THE INDIAN ENTITY, A S IT IS PART OF THE GROSS SALES AND THERE CANNOT BE EXCLUSION OF ANY AM OUNT WHICH 5 ITA NO.8950/MUM/2012 M/S VARIAN INDIA PVT. LTD. LEADS TO THE REIMBURSEMENT MADE BY THE ASSESSEE. THUS, THE COMMISSION AMOUNT HAS TO BE CALCULATED ON THE REIMB URSED AMOUNT ALSO. ACCORDINGLY HE MADE THE ADDITION OF RS.84,10 ,831/-. ON THE BASIS OF CALCULATION GIVEN IN PARA 8.5 OF THE ORDER . 6. THE DRP ALSO CONFIRMED THE FINDING OF THE AO. 7. BEFORE US, THE LD. COUNSEL SUBMITTED THAT THE AS SESSEE IS ENTITLED FOR COMMISSION ON THE SALES VALUE, NET OFF OTHER CHARGES. SCHEDULE A TO THE DISTRIBUTION REPRESENTATION AGR EEMENT SPECIFICALLY PROVIDES THAT, WHERE THE CONTRACTORS COMMISSION ORDER REQUIRES THE PROCUREMENT OF LOCAL NON-VARIAN CONTEN T BY THE CONTRACTOR TO FULFILL SUCH ORDER, COMMISSIONS SHALL NOT BE COMPUTED OF LOCAL SUPPLIES. THUS, THE AGREEMENT ITSELF PROV IDED THAT NO COMMISSION IS PAYBLE ON PROCUREMENT OF LOCAL EQUIP MENTS AND THE SAME SHALL BE REIMBURSED ON COST BASIS. THE LD. AS SESSING OFFICER HAS NOT CONSIDERED THIS VITAL ASPECT WHICH IS FLOWI NG FROM THE DISTRIBUTION AGREEMENT ITSELF AS INCORPORATED BY HI M. IN SUPPORT OF HIS CONTENTION, HE ALSO DREW OUR ATTENTION TO SCHE DULE A TO THE DISTRIBUTION REPRESENTATION AGREEMENT, GIVEN AT PAG E 25 AND PAGE 38 OF THE PAPERBOOK. SIMILARLY, IN THE CASE OF VAR IAN GERMANY, THOUGH SCHEDULE A IS NOT THERE BUT THE AGREEMENT ITSELF PROVIDE THAT IT SHOULD BE ON NET OF SALES AND NOT ON THE EN TIRE GROSS SALES. BEFORE THE DRP THIS OBJECTION WAS RAISED WHICH HAS NOT BEEN CONSIDERED AT ALL. 8. BEFORE US, THE LD. DR SUBMITTED THAT THE SCHEDUL E A WHICH HAS BEEN REFERRED IN AGREEMENT, IS APPEARING AT PAG E 31 OF THE PAPER BOOK, WHICH PROVIDES THAT THE ASSESSEE SHALL BE ENT ITLED TO COMMISION OF SALES VALUE, NET OF FREIGHT, INSURANCE AND OTHER CHARGES. THERE IS NO SUCH SCHEDULE A WHICH HAS B EEN REFERRED BY 6 ITA NO.8950/MUM/2012 M/S VARIAN INDIA PVT. LTD. THE LD. COUNSEL. IN ORDER TO PROVE HER POINT SHE A LSO REFFERED TO PAGE 28 OF THE PAPERBOOK WHICH IS AN AGREEMENT AND IN TH AT AGREEMENT THERE IS REFERENCE TO SCHEDULE A WHICH IS ATTACHE D AT PAGE 31 OF THE PAPERBOOK; THUS, SHE SUBMITTED THAT THE COMMISSION PAYBLE HAS TO BE CONSIDERED ON THE SALES VALUE AND THERE IS NO SU CH STIPULATION THAT LOCAL OR ANCILLARY EQUIPMENT IS NOT PART OF SA LES. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY CALCULATED COMMISSION PAYBLE ON THE REIMBURSEMENT OF COST ON LOCAL EQIPMENTS BY THE ASS ESSEE FOR EXECUTING THE SALE CONTRACT. 9. IN REJOINDER THE LD. COUNSEL SUBMITTED THAT THE SCHEDULE A GIVEN AT PAGE 25 AND PAGE 38 ARE VERY MUCH PART OF THE DISTRIBUTION REPRESENTATION AGREEMENT ONLY WHICH WAS THERE BEFOR E THE AUTHORITIES BELOW. FURTHER, THE COMMISSION CANNOT BE CALCULATED ON THE PRESUMPTION WHEN THE AGREEMENT ITSELF PROVIDES THAT THE LOCAL EQUIPMENTS PROCURED WOULD BE REIMBURSED ON COST BAS IS BY THE AES AND THERE WOULD BE NO COMMISSION ON SUCH PROCUREMEN TS. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PE RUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE DEPARTMENT S CASE IS THAT FOR THE PUPROSE OF CALCULATION OF COMMISSION, THE R EIMBURSEMENT OF EXPENSES, WHICH HAS BEEN RECEIVED BY THE ASSESSEE H AS TO BE INCLUDED IN THE GROSS SALE VALUE, AS THE COMMISSION IS PAYABLE ON THE ENTIRE SALES EXECUTED BY THE ASSESSEE INCLUDING THE PART/EQUIPMENT PROCURRED LOCALLY. IN OTHER WORDS, THE COMMISSION IS RECIEVABLE ON THE REIMBURSEMENT OF THE EXPENSES, BECAUSE IT IS DIRECTLY LINKED WITH THE SALES. WHEREAS, THE ASSESS EES CASE IS THAT, THE REIMBURSEMENT IS ON ACCOUNT OF COST OF PROCUREM ENT OF THE LOCAL EQUIPMENTS WHICH ARE REQUIRED TO FULFILL THE ENTIRE SALE CONTRACT AND SUCH A COST INCURRED ON PROCUREMENT OF LOCAL CONTEN T/EQUIPMENTS CANNOT BE INCLUDED FOR THE PAYMENT OF COMMISSION. THE 7 ITA NO.8950/MUM/2012 M/S VARIAN INDIA PVT. LTD. COMMISSION RECIEVABLE IS ONLY ON THE VARIAN PRODUCT S SOLD AND NOT ON THE COST OF LOCALLY PROCURED EQUIPMENTS. FROM T HE PERUSAL OF THE AGREEMENT AS HAS BEEN REFERRED BY THE LD. ASSESSING OFFICER AS WELL AS BY THE LD. COUNSEL, IT IS SEEN THAT THE ENTITLEM ENT OF THE ASSESSEE FOR THE COMMISSION RECIEVABLE HAS BEEN SPECIFIED IN SCHEDULE A. IN THE PAPER BOOK, THERE ARE TWO SCHDULE A, ONE WHI CH PROVIDES THAT, ASSESSEES ENTITLEMENT TO THE COMMISSION IS ON THE SALE VALUE NET OF FREIGHT, INSURANCE AND OTHER CHARGES, WHEREAS THE OTHER SCHEDULE A; CATEGORICALLY PROVIDES DETAILS OF PERCENTAGE O F COMMISSION RECIEVABLE AND ALSO PROVIDES A STRICT RIDER THAT:- LOCAL CONTENT- WHERE CONTRACTORS COMMISSION ORDER REQUIRES THE PROCUREMENT OF LOCAL NON-VARIAN CONTENT BY CONTRACT OR TO FILL SUCH ORDER, COMMISSIONS SHALL NOT BE COMPUTED ON LOCAL S UPPLIES. 11. IF THE AFORESAID SCHEDULE A CATEGORICALLY PRO VIDES THAT COMMISSION IS NOT TO BE COMPUTED ON THE SALE ORDERS WHICH REQUIRES THE PROCUREMENT OF LOCAL CONTENT BY THE ASSESSEE, T HEN ON SUCH PROCUREMENT OF EQUIPEMENTS BY THE ASSESSEE, COMMISS ION CANNOT BE IMPUTED, BECAUSE IT IS THE REIMBURSMENT OF THE COST OF LOCAL EQUIPMENTS PROCURED. FURTHER, IT APPEARS THAT THIS RELEVANT PIECE OF DOCUMENT WHICH IS ALSO A PART OF DISTRIBUTION AND REPRESENTATION AGREEMENT, HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER. THEREFORE, FOR THE PURPOSE OF VERIFICATION AND EXAM INING OF THE CONTENT OF THIS SCHEDULE, WE RESTORE THE MATTER BAC K TO THE FILE OF AO, TO ADJUDICATE THIS ISSUE AFRESH IN LIGHT OF THE AFORESAID DOCUMENT, BECAUSE IT CHANGES THE ENTIRE COLOUR OF T HE CONCLUSION DRAWN BY THE AO. THE AO WILL ALSO EXAMINE THE FACT , WHETHER THE COMMISSION IS ON SALE OF VARIAN PRODUCTS ONLY OR NO T. THE QUANTUM OF COMMISSION IS A QUESTION OF FACT AND CANNOT BE I MPUTED OR PRESUMED. IN CASE OF REIMBURSEMENT OF EXPENSES FROM VARIAN GERMANY ALSO, THE MATTER IS SET-ASIDE FOR EXAMINING , WHETHER THE COMMISSION IS ON GROSS SALES OR ON THE NET OF SALES OF THE EQUIPMENTS DIRECTLY PROCURED BY THE ASSOCIATE ENTER PRISES. IF THE 8 ITA NO.8950/MUM/2012 M/S VARIAN INDIA PVT. LTD. ARRANGEMENT WITH THIS AE IS ALSO THE SAME, THEN THE SAME CONCLUSION SHOULD BE DRAWN IN THIS CASE ALSO. IN TH E RESULT, GROUND NO.1 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 12. IN GROUND NO.2 THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.10,80,117/- ON ACCOUNT OF ATTRIBUTION OF PROFITS BY TREATING THE ASSESSEE BRANCH AS PERMANENT ESTABLISHMENT OF VARIO US VGCS. IT HAS BEEN ADMITTED FOR BOTH THE PARTIES THAT THE SIM ILAR ISSUE HAS COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL, IN A SSESSEES OWN CASE RIGHT FROM THE A.Y. 2002-03 TO A.Y. 2006-07, W HEREIN, THE TRIBUNAL HAS HELD THAT THE ASSESSEES IS NOT A DEPE NDENT AGENT OF ANY OF VGC AND HENCE IT DOES NOT CONSTITUTE PE OF T HE VGCS. 13. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS SEEN THAT THE ASSESSING OFFICER WHILE ADJUDICATING THE ISSUE WHET HER, THE VARIAN GROUP OF COMPANIES HAVE PE IN INDIA IN THE FORM OF THE BRANCH OF THE ASSESSEE COMPANY, HAS FOLLOWED THE REASONING GI VEN IN THE ASSESSMENT ORDER FOR THE A.Y. 2002-03. THE DETAIL REASONING OF THE ASSESSING OFFICER WHICH IN TURN IS BASED ON THE FIN DING GIVEN IN ASSESSMENT YEAR 2002-03 HAS BEEN DEALT BY THE ASSES SING OFFICER FROM PARAS 6.1 TO PARA 13. THIS ISSUE, WHETHER THE ASSESSEE IS A PE OF VARIOUS VARIAN GROUP OF COMPANIES OR NOT, HAS BE EN DISCUSSED IN DETAIL BY THE TRIBUNAL IN ASSESSEES OWN CASE IN IT A NO. 4672 TO 4676/MUM/2011 FOR THE ASSESSMENT YEARS 2002-03 TO 2 006-07 VIDE ORDER DATED 27/02/2013. AFTER DETAIL ANALYSIS, THE TRIBUNAL HAS FINALLY HELD THAT, THE INDIAN BRANCH OF THE VIPL I S NOT DEPENDENT AGENT OF VGCS AND THEREFORE, IT DOES NOT CONSTITUTE PE FOR VARIOUS VARIAN COMPANIES IN INDIA, AS PER ARTICLE 5(4) 5(5) , RESPECTIVE DTAAS. THE RELEVANT FINDING OF THE TRIBUNAL HAS GI VEN FROM PARA 25 TO PARA 43 OF THE ORDER. THUS, IN VIEW OF THE FIND INGS GIVEN THEREIN AND AS A MATTER OF JUDICIAL PRECEDENCE, WE HOLD THA T THE ASSESSEE 9 ITA NO.8950/MUM/2012 M/S VARIAN INDIA PVT. LTD. BRANCH, DOES NOT CONSTITUTE PE OF VARIAN-ITALY AND, THEREFORE, THE ADDITION OF RS.10,80,117/-, BEING 10% OF GROSS SALE S MADE BY VARIAN ITALY TO ITS CUSTOMER IN INDIA, CANNOT BE TA XED IN THE HANDS OF THE ASSESSEE. THUS GROUND NO. 2 AS RAISED BY THE AS SESSEE IS TREATED AS ALLOWED. 14. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E LEVY OF INTEREST U/S 234B. AS ADMITTED BY BOTH THE PARTIES, THIS ISSUE IS CONSEQUENTIAL AND HENCE THE SAME IS TREATED AS INFR UCTUOUS. 15. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 /02/2014 . $ - /01 3 4 ( 28/02/2014 , 0 - 5 SD/- SD/- P.M. JAGTAP AMIT SHUKLA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) MUMBAI , 4 ( 4 ( 4 ( 4 ( DATED: 28/02/2014 F{X~{T? P.S. $ - + 761 / COPY OF THE ORDER FORWARDED TO : (1) &( 89 / THE ASSESSEE; (2) !' / THE REVENUE; (3) :() / THE CIT(A); (4) : / THE CIT, MUMBAI CITY CONCERNED; (5) 6'= +&&( , , / THE DR, ITAT, MUMBAI; (6) >8 ? / GUARD FILE. ,6 +& / TRUE COPY $( / BY ORDER @ / A / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI