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Judgment
PER NAVEEN CHANDRA, JUDICIAL MEMBER:
The above captioned appeal is preferred by the assessee against the assessment order dated 23.12.2024, passed by the Assistant Commissioner of Income Tax, Circle, Int. Tax 1(3)(1) (hereinafter referred to as 'Id. AO), under section 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') in pursuance of directions of the Id. Dispute Resolution Panel-1, New Delhi (in short ‘ld. DRP') dated 07.11.2024 pertaining to Assessment Year 2022-23.
Brief facts of the case are that the assessee is a foreign company incorporated in Finland and is engaged in the business of manufacturing of products for efficient power transmission, reactive power compensation related project engineering. The assessee, during the year, has received receipts of Rs. 22,36,62,891/- arising from the offshore supply of goods to the Power Grid Corporation of India Ltd. (PGCIL) and its AE, GE T&D India Ltd. (GETDIL). The assessee has filed its return of income for A.Y 2022-23 declaring an income of Rs. Nil and claiming a refund of Rs.97,68,610/-. The case of the assessee was selected for complete scrutiny u/s 143(3) of the Act for the purpose of 'Refund Claim' and notice u/s 143(2) of the Act was served.
The assessee, M/s. Grid Solutions Oy, Finland has entered into contract Agreement dated 22.02.2019 with Power Grid Corporation of India Ltd., New Delhi and M/s. GE T&D India Limited, Noida (Associate of M/s, Grid Solutions Oy, Finland) for 'TCR System (-) 500MVAR (3x33.3% Configuration) complete in all respect, comprising of 1 phase Coupling Transformers (3 main+1 hot standby configuration) including associated equipments/system & all associated civil works etc.at 400kV Kurukshetra under implementation of 500MVAr Thyristor Controlled Reactor at Kurukshetra.
The contract contains three parts as follows:
Part-1: Supply of Goods from Abroad
Part-2: Supply of Goods from within India
Part-3: Supply of Services from within India
The bids were invited by PGCIL for complete project management, design, engineering, type testing, manufacture, testing, supply, port handling, and customs clearance for the imported goods, further handling, inland transportation and delivery at destination Site, unloading, storage, handling at site, erection/installation including associated civil works, employer staff training, testing and commissioning including performance testing of equipment/materials and any other services as required for complete execution of the package. The assessee was the single bidder for the project. It has however, proposed GE T&D India Ltd. (GETDIL) as its associate for the purpose of "executing the Supply of Goods from within India Contract and Supply of Services from within India Contract".
The contract contains a cross-fall-breach clause wherein it is stated that, "Grid Solutions shall be overall responsible and liable for the execution of all the three Contracts irrespective of the fact that the Employer will enter into the 'First Contract' with them and the 'Second Contract' and the 'Third Contract' with GE India the Permitted Assignee of Grid Solutions.
Article 1 of the contract mandates that the documents listed in Volumes A, B, and C, "shall constitute the Contract between the Employer and the Contractor, and shall be read and construed as an integral whole."
The terms of contract provides for an Acceptance test- wherein PGCIL has mandated an acceptance test by extending the scope of work of the assessee to ensure that the goods supplied on an offshore basis pass an acceptance test during erection and commissioning. The AO has held that consequently, the title the does not transfer before the passing of such acceptance test and has placed reliance on Voith Paper GmbH v. Deputy Director of Income Tax, Circle-2(2), New Delhi [2020] 116 taxmann.com 127 (Delhi - Trib.) wherein it was stated that where assessee had entered into an agreement with an Indian buyer for equipment supply and service for commissioning of machinery and transaction including offshore supply of equipment which represented a single composite contract done with involvement of Indian PE, significant part of profit on offshore supply of equipment under supply agreement was to be attributed to PE in India. In this case 35% profits were attributed to the PE.
The assessee has also given a Performance bank guarantee for the functioning of the equipment. The AO has held that consequently, the assessee remains responsible for till final commissioning of the project. In this regard, reliance is placed on Shangha Electric Group Co. Ltd. v. Deputy Commissioner of Income-tax, Circle-3(1)(2) International Taxation, New Delhi [2017] 84 taxmann.com 44 (Delhi Trib) wherein it was held that where assessee, a China based company, was engaged business of supply of Boiler, Turbine and Generator (BTG) equipments to variou companies for setting up of power plants in India, since it had supervisory PE in Inda from which it was supervising erection, installation and commissioning activities of equipments, a part of profits earned from offshore supply of said equipment relatable to operations carried out in India, was liable to tax in India. In this case, AD had attributed 25% of global profit accruing from the offshore supplies to PE in India
The AO has further relied on the Incoterms-International Commercial Terms ('Incoterms') for supply of goods. The assessee has contracted to supply the goods on CIF basis which the AO has held as indicative of the assessee retaining control of the goods till the destination port and determines the stage at which the risk in the property passes. The AO placed reliance on Baker Hughes Asia Pacific Ltd. vs. ADIT (2014) [TS-414-ITAT-2014(DEL)-0) (para 161) and Roxar Maximum Reservoir Performance WLL, In re [2012] 349 T 189/207 Taxman 293/21 taxmann.com 128 (AAR New Delhi). The AO also relied on Vodafone International Holdings B.V. v. Union of India [2012] 204 Taxman 408/17 taxmann.com 202 (SC) and Dongfang Electric Corporation v. Dy. DIT, International Taxation [2012] 52 SOT 496/23 taxmann.com 170 (Kol.). The AO’s held that in a composite contract for supply and erection at sites within the territory of India, the payment received by the assessee for acceptance and performance of the contract as a whole in India becomes income that is accrued in India.
The AO has also relied on results of survey dated 06.06.2019 on GETDIL to hold that GETDIL is DAPE of assessee in India. communication between customers and overseas units. From the statements of personnel of GETDIL, the AO concluded that the sales team of GETDIL in India, supports the foreign companies in securing orders. The personnel of GETDIL also participate in meetings and negotiation serve as communication channel between the foreign companies and Indian customers. The AO relied on the hon’ble Delhi High Court decision in the case of GE Energy Parts V CIT in ITA 621/2017.
The AO further held GETDIL as fixed place PE of the assessee in India. From the statement of the personnel, the AO concluded that the Indian AEs serve as mere Indian branches of the foreign companies of the GE Group (erstwhile Alstom group) Power and Grid businesses. The AO held that the employees of the Indian AEs function not just for the Indian companies (that employ them), but also for foreign companies of the Group that make sales and render services in India and they share the same main office premises with GEPIL, i.e., the headquarters of both of which are located in Axis House, Sector 128, Jaypee Wish Town, Noida.
Given these factual conditions, the AO/DRP, following the reasoning in A.Y 2020-21 having similar and identical issues, and drawing guidance from the provisions of section 44BBB of the Act, have held that the 10% of Off-shore supply receipts of Rs 22,36,62,891/- in the year under consideration, is taxable in India under section 9(1)(i) and Article 7 of India-Finland DTAA as business income in India.
Aggrieved the assessee is in appeal before us and has raised the following grounds of appeal:
1.“That on the facts and circumstances of the case and in law, the assessment order dated 23.12.2024 passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 ("the Act") for assessment year 2022-23 assessing the total income of the Appellant at Rs.2,23,66,290 is bad in law, void-ab-initio and therefore, liable to be quashed and/or set aside.
2.That on the facts and circumstances of the case and in law, the assessment order passed under section 143(3)/144C(13) of the Act for assessment year 2022-23 on 23.12.2024, being barred by limitation, is bad in law and void-ab-initio.
Re: Offshore supply receipts of Rs.22,36,62,890 from PGCIL
3.That the impugned assessment order is unsustainable and contrary to records inasmuch as no factual determination has been undertaken by the assessing officer for the relevant previous year; reliance is solely placed on findings recorded in assessment order for assessment year 2020-21 to make additions to the returned income.
4.That the DRP/ assessing officer erred on facts and in law in alleging that the Appellant was awarded single composite contract on turnkey basis, which was artificially split into three separate contracts to avoid establishment of PE in India and to avoid payment of legitimate taxes in India.
5.That the DRP/ assessing officer erred on facts and in law in holding that receipts from offshore supplies made by the Appellant to Power Grid Corporation of India Ltd ("PGCIL") are taxable in India under the provisions of the Act.
6.That the DRP/assessing officer erred on facts and in law in arbitrarily holding that the Appellant had business connection in India during the subject assessment year.
7.That the DRP/ assessing officer erred on facts and in law in arbitrarily holding that GE T&D India Limited ("GETDIL") constitutes Fixed Place Permanent Establishment ("PE") of the Appellant in India under Article 5 of the India-Finland Double Taxation Avoidance Agreement ("DTAA").
8.That the DRP/ assessing officer erred on facts and in law in arbitrarily holding that GETDIL constitutes Dependent Agent PE of the Appellant in India under Article 5(5) of the India-Finland DTAA.
9.That the DRP/assessing officer erred on facts and in law in arbitrarily holding that the Appellant has PE in India in the aforesaid forms, without bringing on record any evidence and without appreciating that the conditions for formation of each form of PE, as provided in Article 5 of the India-Finland DTAA, were not satisfied.
10.Without prejudice, that the DRP/assessing officer erred on facts and in law in attributing entire alleged profits from offshore supplies made to PGCIL to the alleged business connection/ PE, without appreciating that no part of the activity relating to said offshore supplies was undertaken by the alleged PE in India.
11.Without prejudice, that the DRP/ assessing officer erred on facts and in law in computing income from offshore supplies by drawing guidance from section 44BBB of the Act.
Re: Computational error
12.That the assessing officer erred on facts and in law in computing the 'total interest and fee payable in the computation sheet annexed to impugned assessment order at Rs.11,39,848 instead of Rs.1,000. The Appellant craves leave to add to, amend, alter or vary the above grounds of appeal at or before the time of hearing.”
Ground No.1 is general in nature and Ground no.2 is not pressed hence dismissed as not pressed.
Ground No.3 to 11 is with regard to off-shore supply receipts of Rs.22,36,62,890/- from Power Grid Corporation of India Ltd. (“PGCIL”) Before us, ld. Counsel for the assessee stated that in A.Y 2020-21 the AO had treated the GE T&D India Ltd. as constituting DAPE and fixed place PE of the assessee as per Article 5(1) of the India-Finland DTAA. As the amount involved in A.Y. 2020-21 was small, hence, no appeal was filed. Ld. Counsel stated that since no appeal was filed does not tantamount to the assessee’s acceptance of GE & TD India Ltd. as fixed place PE and DAPE of assessee in India.
With regard to AO’s argument regarding the title transfer of the offshore supplies bases on the various terms of the contract like acceptance test, performance bank guarantee and incoterm ('CIF'), the ld AR they cannot be construed to be a condition which postpones the transfer of title to the goods till that time and further cannot be the basis to make the offshore supply taxable and placed reliance on Hyosung Corporation (AAR No. 773 of 20081 (Later on confirmed by the Delhi High Court/Jurisdictional High Court). The ld. AR referred to page 83 at clause 27 which describe the Transfer of Ownership that ownership of the Plant and Equipment to be imported in to India shall be transferred to the Employer upon loading on to the mode of transport to be used to convey the Plant and Equipment from the country of origin to that country and upon endorsement of the dispatch documents in favour of the Employer. The ld. AR referred to Clause 27.5 to show that the transfer of ownership of the Plant and Equipment, the responsibility for care and custody thereof together with the risk of loss or damage thereto shall remain with the Contractor pursuant to GCC Clause 28 (Care of Facilities). The ld. AR further submitted that the risk is divorced from the title. The ld. AR further referred to pages 142-152 which contained various invoices to show that the assessee has directly sold the equipment to Power Grid Corporation of India Ltd on CIF delivery terms. The ld AR argued that the stipulation that the supplier shall continue to be responsible for the quality and performance of the goods until the final take over on testing of the equipment, cannot be construed to be a condition which postpones the transfer of title to the goods till that time and relied DIT vs. Nokia Networks OY [2012125 taxmann.com 225 (Delhi) (later approved by the Hon'ble Supreme Court as well).
The ld. Counsel with regard to the AO’s view that the contract is a composite contract and it has been artificially split for tax purpose, argued that assessee had no role in contract structure and reflects the requirement and understanding of customer. Further, the assessee has not assigned any work to GETDIL but has entered into separate contracts with GETDIL for onshore scope of work and relied on DIT V Ericsson AB 343 ITR 470 (Del).
On the issue of considering the assessee having a business connection in India and the office of GE & TD India Ltd as the fixed place for PE of the assessee, the ld AR submitted that the AO did not provide any evidence and relied on CIT V R D Agarwal and Company 56 ITR 20(SC).
The ld. Counsel further stated that the AO conclusion that the findings in the course of survey establish that the foreign companies of the T&D Segments of the GE Group (erstwhile Alstom group companies) including Grid Solution Oy have Dependent Agent PE and Fixed Price PE in India, is wrong as survey under 133A(2A) was conducted on 06-07, June, 2019 on GET & D India Limited and none of the statement/contract pertain to the assessee and none of the employee relate to the business to the assessee. The ld AR further referred to financial statement at page 153 PB of the Indian entity to show that the GE & TD India Ltd. are Indian entity having its own separate business. The ld. AR referred to page 164 of the paper book which is the statement of Profit and Loss to show that the Indian entity has its own Revenue of Rs.3065.95 crore and supply to the assessee is only Rs.22 crore out of 3000 crore. The assessee submitted that this is to point out that the Indian entity is not legally, economically or otherwise depend on assessee. The ld AR stated that mere presence of employees of GETDIL in the meetings with PGCIL does not warrant that Assessee is dependent on GETDIL since the participation of representatives of GETDIL, in meetings with the customer, was restricted to the scope of work bid by GETDIL.
On the AO’s invocation of section 44BBB and attribution of 10% of the off-shore receipt as income of the assessee’s PE in India, the ld AR submitted that provisions of section 44BBB does not apply, which only applies for power projects. The Assessee has earned income from offshore supplies made to PGCIL in connection with PGCIL's project for setting up transmission grid across specified areas. It is further submitted that as PGCIL's projects are not for generation of Power thus such project cannot be regarded as Power projects for the purpose of section 44BBB of the Act, and the said section has no operation in the facts of the Assessee and relied on DDIT vs Mitsui & Co Ltd: 118 taxmann.com 379 (Delhi ITAT), the ITAT.
The ld. AR referred to the decisions of ITAT in the case of other GE Entities regarding similar findings such as UK Grid Solutions Ltd. vs. DCIT (International Taxation) [2024] 160 taxmann.com 694 (Delhi – Trib.) to show that the concept of getting three different contracts: one for ‘offshore supply contract’, second for ‘supply of plant and equipment’ and third for ‘onshore service contract’ does not create artificial split of contract. The ITAT has also held that the Indian AE does not constitute dependent agent PE of assessee in India.
The ld. AR also relied on the decision of ITAT in the case of its group concern GE Hydro France vs. DCIT in ITA No.1881/Del/2023 for A.Y. 2020-21 where similar issue was decided in favour of the assessee. The ld. Counsel further relied on the decision of the Delhi High Court in the case of DIT vs. LG Cable Ltd. [2011] 237 CTR 438 (Del) to strengthen its argument that acceptance test is not required for passing of ownership title. The ld. Counsel for the assessee further submitted that the survey is not related to the assessee and therefore, the findings of the survey cannot apply on the case of the assessee.
Per contra, ld. DR strongly relied on the fall breach clause referred by the AO at page 10 of his order. The ld DR submitted that the contract is composite contract and the three parties in the contract, are related to each other. The assessee however, has the sole responsibility for the entire contract. The ld DR emphasized on the acceptance test, performance guarantee which the assessee has as its responsibility.
The ld. DR pointed out that the finding of the survey in the Indian entity was that the three contracts is a whole contract and has been artificially split into three parts. The ld. DR pointed out that the CIF cost, insurance, freight method adopted for delivery of goods shows that the title of goods does not pass outside India and that the offshore supply is to be taxed in India as the assessee has PE in India.
In rejoinder, the assessee has relied on the decision of Supreme Court in the case of Ishikawajma – Harima Heavy Industries Ltd. vs. DIT reported in [2007] 288 ITR 408 (SC), decision of Delhi High Court in the case of DIT vs. Ericsson AB reported in 343 ITR 470 (Del) and DIT vs. LG Cable Ltd. [2011] 237 CTR 438 (Del).
We have heard the rival submission and perused the material available on record. We find that the ITAT in the sister concern i.e. UK Grid Solutions Ltd. for A.Ys. 2018-19 in 149 taxmann.com 209(Del Tri); UK Grid Solutions Ltd. for A.Ys. 2015-16 to 2017-18, and for A.Y. 2020-21 in 160 taxmann.com 694 (Del Tri); UK Grid Solutions Ltd. in A.Ys.. 2022-23 180 taxmann.com 388(Del Tri); GE Hydo France V DCIT in ITA 2085, 2086/Del/2022 for AY 2018-19 and 2019-20 and GE Hydo France V DCIT in ITA 1881/Del/2023 for AY 2020-21 have decided the identical issues in favour of the assessee.
With respect to the issue whether the three contracts is a whole contract artificially split up and the constitutively three different contracts, the ITAT in the sister concern i.e. UK Grid Solutions Ltd. for A.Ys. 2018-19, to avoid PE status in India, decided the issue in favour of the assessee. With respect to the assessee having a permanent establishment in India and the Indian associate was DAPE of assessee in India was negatived. The identical issue of transfer of ownership outside in India, on account of off shore supply of goods, has been decided by the ITAT in favour of the assessee as under:
“2.The facts in brief are the assesse appellant ALSTOM is a foreign company incorporated in United Kingdom and a tax resident of that country in terms of Article 4 of India-UK Double Taxation Avoidance Agreement (hereinafter referred as for short ‘DTAA’). Assessee company accordingly had claimed to be governed as per the provisions of the Act or the DTAA whichever is more beneficial to the assessee in terms of beneficial provisions of Section 90(2) of the Act. Assessee is engaged in the business of designing, engineering, manufacturing and supply of electric equipment that help in the transmission and distribution of power, commissioning and servicing of transmission and distribution systems on turnkey basis. During the relevant assessment years, the assessee had earned income from various Indian customers which the assessee claimed was not taxable as income was from offshore supplies only. The case of assessee was selected for scrutiny due to large claim of refund against tax deducted source. The record shows the assessee was awarded a contract by Power Grid Corporation India Ltd. (hereinafter referred to as ‘PGCIL) for setting up a 3000 MW HUDC Terminal in Chhattisgarh, India. ………
11.Now, giving thoughtful consideration to the matter on record and the submissions, at the outset, the Bench feels relevant to observe that in the assessment order the Ld. AO has discussed more about the various provisions and principles of law governing the taxability in case of income which is deemed to accrue or arises in India for the purpose of Section 9 of the Act and how there has to be attribution to profit to the PE, without discussing the evidence in the case in hand, to give conclusive findings as to how the Indian associate of the assessee happens to be an agent or construction PE. His primary and ultimate reliance was on the fact that there was single composite contract which was divided into three contracts and that in two contracts, which were to be performed by the Indian entity, the ultimate liability for non-performance or compensation being on assessee, therefore, the Indian entity was a PE and the provisions of profit attribution were applicable. ………….
22.Hon’ble Delhi High Court in the Linde AG Case (supra) has also referred to case of Hyundai Rotem Co., in re [2010] 323 ITR 277/190 taxman 314 (AAR) which was also referred by the assesse before Ld. Tax Authorities below and where the facts were that Hyosung Corporation submitted a bid for execution of the works relating to 800 KV/400KV Tehri Pooling Station which was floated by Power Grid Corporation of India Limited (Power Grid). The applicant was successful and its bid was accepted. As per the terms and conditions of the bid, the applicant could assign the whole or part of the work to an independent contractor subject to the approval of Power grid. In terms of this provision, the applicant requested that part of the contract relating to onshore supply and services be assigned to M/s L & T. Accordingly, Power Grid entered into a separate contract for onshore supplies and services with M/s L & T. Although, Hyosung continued to be responsible for the overall execution of the project, the scope of work of Hyosung was limited to the offshore portion of the contract. The facts of this case are quite identical; with PGCL being a common party and Ld. AAR in this matter vide application AAR no. 773 of 2008 order dated 17/6/2009, after taking into consideration the overall responsibility stipulations for the successful completion of the three contracts rested with the applicant Hyosung in line with the proposal in the bidding document, observed in para 7.4 that;
“By incorporating various safeguards in the contract, Power Grid took the necessary applicant and L&T would act in harmony and maintain requisite coordination for arrangement conceived of and agreed to by the parties keeping in view the overall objective of successful commissioning of the project.”
23.Thus, the bench is of considered opinion that the Ld. Tax Authorities below have fallen in error in concluding that there was an artificial split of a contract and that there was one inseparable, indivisible and composite contract. ……….
25.1There is no question of any agent and principle relationship between the assessee and the Indian associate for a very substantial reason that PGCIL has treated in its contract documents, ALSTOM-I to be its ‘Independent Contractor’. There is substance in the argument of Ld. Sr. Counsel on the basis of judgment of Hon’ble Supreme Court in CIT vs. E-funds IT solutions (supra) that the onus was on the department to prove the existence of PE. The Bench is of considered opinion that such an onus can be considered discharged by specific reference to the evidence. No evidence is brought on record to show that the Indian Associate was employed by any ‘act’ of the assessee to represent the assessee independently while dealing with PGCIL. On the contrary what is established is that it was the assessee at whose proposal, ALSTOM-I was accepted to be an Associate of the assessee and the employer PGCIL treated ALSTOM-I as its ‘independent contractor’ on the terms and conditions, as laid down in the bidding document. If there was any involvement of the employees of Indian Associate, at any stage in the meetings between assessee and the PGCIL that was bound to be there and outcome of the fact that assessee and its Indian associate were required to work in tandem and that does not give rise to existence of a dependent agent P E of the assessee. ……
27.As for the applicability of Section 44BBB of the Act, is concerned, it can be observed that the foundation of it was existence of a PE. The assessee under the ‘First contract’ was merely under obligation to make off shore supplies and wherein property in the goods transferred outside Indian, therefore as Section 44BBB does not speak of engagement of a foreign company for ‘supply’ in connection with the turnkey Power Project, the provisions of Section 44BBB are not applicable. Thus Ld. DRP has fallen in error in sustaining application of Section 44BBB of the Act, on premises that the assessee is involved in the end to end execution of the project in India. The revenue derived by the assessee were on the basis of offshore supplies and not out of any construction, erection, testing or commissioning activities of a turnkey power project in India. Thus, the application of section 44BBB to such revenue, which is not per se taxable India, is not sustainable.
28.It also appears that the Revenue is not disputing the fact that under the ‘First Contract’ assessee was only supposed to make off shore supplies. Otherwise too it is appearing from the recitals of ‘First Contract’ that the procurement by PGCIL, was on the basis of, “CIF Indian Port of Entry supply”. The title in property had passed out side India. The payments were also made outside India in terms of this contract. The settled proposition of law in this regard, rightly relied by Ld. Sr Counsel for assessee, is sustainable and the relevant conclusion in para 79, from the judgment of Hon’ble Supreme court in the case of Ishikawajma-Harima Heavy Industries Ltd. (supra)is reproduced below;
“Re : Offshore Supply :
(1)That only such part of the income, as is attributable to the operations carried out in India can be taxed in India.
(2)Since all parts of the transaction in question, i.e. the transfer of property in goods as well as the payment, were carried on outside the Indian soil, the transaction could not have been taxed in India.
(3)The principle of apportionment, wherein the territorial jurisdiction of a particular state determines its capacity to tax an event, has to be followed.”
29.Thus, the Bench is inclined to conclude that there was not an artificial split of bid into three separate contracts to avoid taxes in India. In the present case, the Indian Associate’s non- involvement in off-shore transaction excludes it from being a part of the cause of the income itself, and thus there is no business connection. The Ld. Tax authorities below failed to appreciate the distinction between the existence of a business connection and the income accruing or arising out of such business connection, which is clear and explicit. It is established that assessee had no business connection or dependent agent PE or construction PE in India. The attribution of profit from off-shores supplies made to PGCIL to the alleged business connection or PE and application of Section 44BBB is not sustainable. The ld. Tax Authorities below have fallen in error to hold that off-shores supplies to PGCIL are taxable in India. The assessee was merely under liability for making off-shores supplies to PGCIL under the ‘First contract’ for which the revenue earned is not taxable in India. Consequently, ground no. 3 to 8 are decided in favour of the assessee.”
We are of the view that the issue of taxability of off shore supply in India on account that the transfer of goods is made on CIF basis, are covered in favour of the assessee by the decisions of ITAT referred above.
Further, whether the Indian entity GETDIL constitutes DAPE of assessee in India is also covered in favour of the assessee. We find that the Indian entity has its own separate business and is not legally, economically or otherwise depend on the assessee. Whether the assessee has a PE in India is also covered in favour of the assessee. We also find that Hon’ble Jurisdictional Delhi High Court has decided in the case of Ericsson AB (supra) that the acceptance test is not required to pass for deciding the issue for passing of ownership title. We also find that the survey under section 133A(2A) of the Act is not related to the assessee. In view of the discussion upon, we are of the considered view that the assessee does not have DAPE or constitute fixed place PE of the assessee as per Article 5(1) of the India-Finland DTAA. The addition made by the AO is accordingly, deleted. Appeal of the assessee is allowed.
On the issue of applicability of section 44BBB is also covered in favour of the assessee by the ITAT decision as above.
In the result, appeal filed by the assessee in ITA No.1049/Del/2025 is allowed.