Case Law Details
Inmarsat Global Ltd. Vs DCIT (ITAT Mumbai)
The issue under consideration is whether DRP is correct in considering the Liaison Office (LO) and Land Earth Station (‘LES’) constitutes a permanent establishment (PE) in India?
ITAT states that, the assertions of the assessee qua the activity of the assessee and liaison office as well as the significance of the use of SSMS equipment located in India qua the services provided to VSNL clearly establishes that the same could not be construed to constitute a PE in India. The DRP, in our view, has also not referred to any specific instances in the functioning of the liaison office to point out that it was rendering services which could be construed as being a PE in India. Considering the orders of the authorities below as well as the material led by the assessee before the lower authorities, in the present case, it is safe to deduce that the Revenue has failed to discharge its burden of proving that the activities of the liaison office were such as to construe it to be a PE in India. On the aspect of use of SSMS equipment also, ITAT find that there is no reason to hold that it could be construed as a PE in India. So far as the reference to the LES made by the DRP is concerned, the same, in our view, is quite misplaced. The DRP itself notes that the LES is owned by the LESO, i.e. VSNL. It is also a feature of assessee’s agreement for providing services that it is the LESO, i.e. VSNL, who has the full right and responsibility with regard to the LES. In any case, it is undeniable that the LES is not owned by the assessee, an aspect which the DRP itself has noted in its order. Therefore, considering the matter in its entirety, ITAT find it erroneous on the part of the Assessing Officer to hold that there exists a PE of the assessee in India. Thus, assessee succeeds on this aspect also.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeal filed by the assessee is directed against the order passed by the A.O under Sec.143(3) r.w.s 144C(13) of the Income Tax Act, 1961 (for short „Act‟), dated 25.09.2018 for A.Y. 2015-16. The impugned order has been assailed before us on the following grounds of appeal:
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