Case Law Details
An agent is deemed to be a PE of a foreign enterprise, if he is not independent and has habitually exercises an authority to conclude contracts in the name of the enterprise unless the activities of such person are limited to those mentioned in paragraph 4 that is, to the purchase of goods or merchandise for the enterprise; or if he has no such authority, but habitually maintains a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.
Thus, the character of an agent, who can be said to be a dependent only if, firstly, the commercial activity for the enterprise is subject to instructions or comprehensive control and secondly, he does not bear the entrepreneur risk. It is sufficient for the establishment of an agency PE that the agent has sufficient authority to bind the enterprise’s participation in the business activity. Here in this case, none of the conditions as stipulated in Article 5(4) is applicable because Taj India is acting independently qua its distribution rights and the entire agreement ostensibly is on principal to principal basis as analyzed and found by id. Commissioner (Appeals). When the entire relationship qua the distribution revenue is that of principal to principal basis and the Taj India is acting independently, then it moves out from the conditions laid down in Article 5(4). Thus the distribution income by the assessee cannot be taxed in India, because Taj India does not constitute an agency PE under the terms of Article 5(4).
FULL TEXT OF THE ITAT JUDGMENT
The aforesaid cross appeals have been filed by the assessee as well as by the Revenue against separate impugned orders passed by the learned DRP and the learned Commissioner (Appeals), Mumbai for quantum of assessment for the assessment years 2006-07, 2007-08 and 2008-09. Since, common issues are involved in all the appeals arising out of identical set of facts, therefore, same were heard together and are being disposed off by way of this consolidated order.
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