M/S. QLIKTECH INTERNATIONAL AB,BANGALORE V. DEPUTY COMMISSIONER OF INCOME TAX, ASSESSMENT CIRCLE-2(1), BENGALURU

MA 6/BANG/2025

AI Insights

The case involves QlikTech International AB, a foreign company, and its Indian subsidiary, QlikTech India Pvt. Ltd. The dispute centered on the tax treatment of software payments made by the Indian subsidiary to the foreign parent, which were subjected to Tax Deducted at Source (TDS). The Indian subsidiary was initially considered a DAPE of the foreign parent, leading to income attribution in India. However, the ITAT, upon reviewing the transfer pricing adjustments made in the subsidiary's assessment, concluded that the Indian subsidiary should not be treated as a DAPE. The Tribunal set aside the issue to the AO for decision in line with the law, but the foreign parent sought a modification to limit the AO's scope during the reassessment, which the ITAT granted.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361084 (ITAT-BANGALORE)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARITHIVEL V
• Assessee Lawyers: T SURYANARAYANA
• Keywords: Set aside; Transfer pricing; TDS; Permanent establishment

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER MA No.06/Bang/2025 [IT(IT)A No. 990/Bang/2023] Assessment Year: 2021-22 QlikTech International AB C/o QlikTech India Pvt. Ltd., Kalyani Solitaire, Ground & 1st Floor, 165/2, Krishna Raju Layout, Doraisanipalya Off Bannerghatta Road, Bengaluru – 560 076. PAN – AAACQ 2234 R Vs. The Dy. Commissioner of Income Tax, Assessment Circle – 2(1), Bengaluru. . APPELLANT RESPONDENT Assessee by : Shri T Suryanarayana, Advocate Revenue by : Shri Parithivel V, JCIT (DR) Date of hearing : 25.04.2025 Date of Pronouncement : 22.05.2025 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: This Miscellaneous Application (MA) has been filed by the assessee under section 254(2) of the Income Tax Act, 1961 seeking modification in the order passed by the ITAT. 2. The brief facts of the case are that the assessee is a foreign company having a subsidiary in India, namely, Qliktech India Private Limited. The assessee had supplied software to its Indian subsidiary, which remitted the payment after deducting tax at source (TDS). The MA No.06/Bang/2025 Page 2 of 4 . assessee, having not offered any income in its return on such software supply, claimed a refund of the TDS so deducted. 3. In the course of assessment, the Assessing Officer (AO) held that the Indian subsidiary constituted a Dependent Agent Permanent Establishment (DAPE) of the assessee and accordingly attributed income to the assessee in India. This finding was upheld by the Dispute Resolution Panel (DRP). 4. However, while disposing of the appeal, the ITAT noted that the transaction between the assessee and the Indian subsidiary was treated as a sale/purchase of software and was subject to a transfer pricing study in the assessment of subsidiary company. In the case of the assessment of subsidiary company, the Transfer Pricing Officer (TPO) had not invoked DAPE provisions for the same transactions. In light of this, the Tribunal in the case of the assessee concluded that the question of treating the Indian subsidiary as a DAPE does not arise, yet the matter was set aside to the AO/TPO for fresh adjudication. 5. The learned Authorized Representative (AR) of the assessee contended that once the ITAT had concluded that the Indian subsidiary does not constitute a DAPE, there was no necessity to remit the matter back to the AO for fresh adjudication. The ld. AR further submitted that there is a concern that the AO might expand the scope of the proceedings during the set-aside assessment as it has been set-aside for fresh adjudication. Therefore, the AR prayed that the Tribunal’s order be modified to limit the AO’s scope accordingly. MA No.06/Bang/2025 Page 3 of 4 . 6. On the other hand, the learned Departmental Representative (DR) did not raise any objection to the submissions of the learned AR of the assessee. 7. We have heard both parties and perused the records. We find merit in the contention of the assessee. The learned DR also could not controvert the arguments advanced by the learned AR for the assessee. Accordingly, we modify the finding given by the ITAT in paragraph No. 10 of the order in ITA No. 990/Bang/2023 which is reproduced as under: 10. We have heard the rival contentions of both the parties and perused the materials available on record. On perusal of the order of the TPO in the case of the subsidiary company namely Qliktech India private limited, we find that the transaction between the assessee and its subsidiary for the sale of software product has been accepted as sale and purchase and further made subject to TPO adjustment. Accordingly, the question of treating the Indian subsidiary as dependent agency permanent establishment does not arise. The copy of the TP order in the case of the subsidiary company is available on record. However, we note that such document was filed before us as additional piece of evidence and therefore we are of the view that such TPO order has not been verified at the level of the lower authorities. Accordingly, it is clarified that if, upon verification, the Revenue finds that the transaction between the assessee and the Indian subsidiary has been accepted as a transaction of purchase and sale and has been subjected to arm’s length price determination, then the Revenue shall not treat the Indian subsidiary as a DAPE in the case of the assessee. Hence, we set aside the issue to the file of the AO to decide in the light of the above stated discussion and as per the provisions of law. Hence the ground of appeal of the assessee is hereby allowed for statistical purposes. 8. In view of the above, the direction/finding given by the ITAT in Para No. 10 of the order in ITA No. 990/Bang/2023 stands modified as discussed above. Hence, the miscellaneous application filed by the assessee is allowed. MA No.06/Bang/2025 Page 4 of 4 . 9. In the result, the miscellaneous application filed by the assessee is allowed. Order pronounced in court on 22nd day of May, 2025 Sd/- Sd/- (KESHAV DUBEY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 22nd May, 2025 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore "