SAIC MOTOR CORPORATION LTD,CHINA V. DCIT,INTERNATIONAL TAX, GURGAON

SA 108/DEL/2025

AI Insights

The case involves SAIC Motor Corporation Ltd, a Chinese company, appealing against an outstanding demand of Rs. 10.15 crores, which includes interest under section 234B of the Income Tax Act. The primary issues leading to this demand were the determination of a Permanent Establishment (PE) in India and the attribution of profits to this PE concerning offshore sales and the secondment of employees. The assessee argued that the profits from offshore sales should not be attributed to the PE in India, citing the Supreme Court's decision in Ishikawajma Harima Heavy Industries Ltd. v. Director of Income-tax. Additionally, regarding the secondment of employees, it was argued that these employees were not engaged in activities that would qualify the assessee as having a supervisory PE in India, referencing a Delhi High Court decision in PCIT Vs. Samsung Electronics Co. Ltd.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470548 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Other Referred Cases: Ishikawajma Harima Heavy Industries Ltd. v. Director of Income-tax, PCIT Vs. Samsung Electronics Co. Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: AJAY VOHRA
• Keywords: Permanent establishment; Application of stay
• Section: 192; 234B

Judgement Text

"INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER SA No. 108/Del/2025 (In ITA No. 1191/Del/2025) (Assessment Year: 2022-23) SAIC Motor Corporation Ltd, China Vs. DCIT, International Taxation, Gurgaon (Applicant) (Respondent) PAN:ABFCS0870H Assessee by : Shri Ajay Vohra, Sr. Adv Shri Neeraj Jain, Adv Shri Kumal Pandey, Adv Shri Shivam Kansal, AR Revenue by: Shri Om Prakash, Sr. DR Date of Hearing 07/03/2025 Date of pronouncement 07/03/2025 O R D E R PER M. BALAGANESH, A. M.: 1. By virtue of this stay application, the assessee seeks to keep the outstanding demand of Rs. 10.15 crores in abeyance which includes the interest u/s 234B of the Act of Rs. 2.57 crores. The major dispute which lead to the raising of demand on the assessee are as under:- a. Holding that assessee has Permanent Establishment (PE) in India ; b. Attributing profits to PE in India in respect of offshore sales made by the assessee ; SA No. 108/Del/2025 SAIC Motor Corporation Ltd Page | 2 c. In respect of secondment of employees, holding that assessee has supervisory PE in India. 2. We find that the ld DRP in para 5.3.2 in page 102 of the appeal set had agreed to the fact that the sales has been made offshore by the assessee for which title is transferred outside India. Hence, the ld AR argued there cannot be any attribution of profits to PE in India in respect of offshore sales outside India. The ld AR also submitted that this issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of Ishikawajma Harima Heavy Industries Ltd. v. Director of Income-tax reported in 288 ITR 408 wherein, the Hon’ble Court held that activities which are carried on outside the source state and which are not connected to the PE cannot be attributed to the PE. 3. In respect of demand raised on account of secondment of employees, the ld AR submitted that those employees are paid salary in India by the assessee which have been duly subjected to deduction of tax at source in terms of Section 192 of the Act. The ld AR also submitted that those employees are duly paying the taxes in India by filing the returns and that the issue in dispute is squarely covered in favour of the assessee by the decision of Hon'ble Delhi High Court in the case of PCIT Vs. Samsung Electronics Co. Ltd reported in 170 taxmman.com 417 dated 15.01.2025 wherein, it was held that foreign company which had seconded employees in India were not discharging functions or performing activities connected with Global Enterprises of that assessee and their placement in India was with the objective of facilitating activities of India subsidiaries, those employees would not meet qualifying benchmarks of a PE. 4. Accordingly, the ld AR submitted that no demand per se is practically payable by the assessee as the issues are covered by the decision of the Hon’ble Jurisdictional High Court and Hon'ble Supreme Court as referred supra. He also fairly stated that the assessee had also raised the limitation issue of Roca Bathroom decision and the same may not be pressed by him at the time of final hearing of the appeal in case the Hon'ble Supreme Court does not decide the issue before the date of hearing of this main appeal. SA No. 108/Del/2025 SAIC Motor Corporation Ltd Page | 3 5. Per Contra, the ld DR insisted for payment of 20% of the outstanding demand subject to which stay could be granted or in the alternative reject the stay petition of the assessee. 6. Considering the submissions made hereinabove, we are of the opinion that this is a fit case for grant of stay for a period of 180 days from today or till the disposal of the main appeal, whichever is earlier. The main appeal is listed for hearing today on 21.04.2025 with the consent of both the parties and no fresh notice of hearing would follow for the same. Paper book, if any, need to be filed by the either side with an advance copy to the respective parties. We would like to make it very clear that the observations made hereinabove shall not be considered as having any precedent value for the main appeal and the main appeal shall be decided by the respective Bench , uninfluenced by the observations made hereinabove. 7. In the result, stay application of the assessee is allowed. Order pronounced in the open court on 07/03/2025. -Sd/- -Sd/- (VIKAS AWASTHY) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07/03/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "