Huawei Technologies Co. Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that co-ordinate bench in assessee’s own case in earlier assessment years duly hold that Huawei India is permanent establishment of Huawei China in India. Based on norms of judicial discipline the same is implied in the present assessment too.
Facts- The appeal is filed by the assessee (M/s. Huawei Technologies Co. Ltd., China) (Huawei China) challenging the final assessment order dated 28.02.2022 passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (‘the Act’) pertaining to assessment year 2018-19, in pursuance to the directions of learned Dispute Resolution Panel (DRP).
The assessee contested that AO has erred in holding Huawei Telecommunication (India) Company Private Limited (Huawei India) to be a Permanent Establishment (PE), Fixed Place PE, Installation PE, Service PE, Dependent Agent PE of the Appellant in India.
Accordingly, AO proceeded to attribute profit to the PE. Referring to Rule 10 and the global accounts furnished by the assessee, the Assessing Officer worked out the weighted average net operating profit to 2.51% and attributed 20% out of such profit to the PE in India. Accordingly, he made addition of an amount of Rs.4,25,84,960/-.
Conclusion- As noted above, the issues have been consistently decided against the assessee by the Tribunal beginning from assessment year 2005-06 to 2016-17. There is no difference in the factual position permeating through different assessment years, including, the impugned assessment year. It is relevant to observe, before us, learned counsel appearing for the assessee has submitted that against the decision of the Tribunal for assessment years 2005-06 to 2008-09, the assessee has preferred appeals before the Hon’ble High Court and the appeals have been admitted. Thus, when there are decisions of the Coordinate Bench in assessee’s own case on identical set of facts and circumstances upholding the decision of the Revenue Authorities with regard to existence of PE and attribution of profit, as a Bench of equal strength, we are bound by such decisions. Therefore, norms of judicial discipline, decorum and propriety demand that we have to follow the earlier decisions of the Tribunal.
FULL TEXT OF THE ORDER OF ITAT DELHI
Captioned appeal, at the instance of the assessee, is directed against the final assessment order dated 28.02.2022 passed under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (for short ‘the Act’) pertaining to assessment year 2018-19, in pursuance to the directions of learned Dispute Resolution Panel (DRP).
2. Grounds raised by the assessee are as under:
1. That on the facts and in the circumstances of the case and in law, the Learned Assessing Officer (`A0′) erred in passing the impugned assessment order dated February 28, 2022 under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 (‘Ace) pursuant to the directions of the Hon’ble Dispute Resolution Panel —1 (hereinafter referred to as `the Hon’ble DRP’) in assessing the income of the Appellant at INR 4,19,22,61,900/-as against the returned income of INR 51,76,97,370/- reported by the Appellant in the return of income (`ROP).
2. That on the facts and in the circumstances of the case and in law, the assessment order dated February 28, 2022 passed by the Learned AO is unsigned and hence is bad in law and void-ab-initio.
3. Without prejudice to the above, on the facts and in the circumstances of the case and in law, the Learned AO erred in passing the impugned Assessment Order while not appreciating the correct factual position and legal principles brought on record by the Appellant. Further, the Learned AO / the Hon’ble DRP erred in making / not rejecting the allegations, incorrect observations, assertions and inferences on the basis of mere conjectures and surmises, which are both factually incorrect as well as legally untenable and therefore, the impugned Assessment Order had in law and void ab-initio.
Appellant alleged to constitute a Permanent Establishment in India.
4. That on the facts and circumstances of the case and in law, the Learned AO has erred in holding Huawei Telecommunications (India) Company Private Limited (`Huawei India’) to be a Permanent Establishment (PE’) of the Appellant in India under the provisions of Article 5 of Double Taxation Avoidance Agreement between India and China (India-China Tax Treaty’).
4.1 That on the facts and circumstances of the case and in law, the Learned AO has grossly erred in holding that Huawei India constitutes a ‘Fixed Place PE’ of the Appellant in India under Article 5(1) of the India-China Tax Treaty owing to following incorrect assumptions/ inferences:
