Grid Solutions Oy (Ltd) Vs ACIT International Taxation & Anr. (Delhi High Court)
Conclusion: Whether or not a permanent establishment existed in a State during a given period must be determined on the basis of the circumstances applicable during that period and not those applicable during a past or future period. AO should take cognizance of a “fundamental aspect pervading through different assessment years”. However, AO could not have proceeded on an “assumption” that facts had remained unchanged and that the business model had remained unaltered.
Held: Assessee-company was formally known as Alstom Grid OY and was part of the Alstom Group till 02 November 2015. On or about the said date the Grid business of Alstom was taken over by GE. A survey under Section 133A(2A) was stated to have been conducted on GE T&D India Limited and which had taken over the Transmission and Distribution4 grid business of the erstwhile Alstom Group. In the course of that survey, the respondents asserted that the nature of activities undertaken by members of the GE Group engaged in T&D business would establish they constituted a Fixed Place and Dependent Agent PE. AO came to hold that the performance of senior functionaries of associated enterprises in India was monitored, controlled and managed by foreign companies of the GE Group, with Indian AEs playing a significant part in connection with the business of the foreign companies and being indelibly connected in the global business of the GE Group. It was common ground that the reassessment action that formed the subject matter of that litigation emanated from a search and survey conducted in 2007 and on the basis of which assessments for AYs 2001-02 to 2008-09 came to be reopened. The subsequent survey which formed the basis for the reassessment initiated and impugned in these writ petitions, however, was one which was independently undertaken in 2019. The issue which thus consequently arose was whether the findings and conclusions which came to be rendered and drawn for the aforesaid block of AYs’ would have constituted sufficient ground to reopen assessments pertaining to AYs 2013-14 to 2017-18. Assessee contended that the surveys as well as the material gathered by the Department in 2007 and 2019 could not possibly be extrapolated to other years. It was held that Department failed to show any facet or fact pertaining to the AYs’ in question which could have been read as “demonstrative of an application of mind” to the facts that prevailed in the years 2007 and 2019. It became more than apparent that AO had merely proceeded to adopt and reiterate what was found in the course of the survey undertaken in 2007 and 2019 read alongside the judgment of this Court rendered in GE Energy,”. It was permissible for an AO to take cognizance of a “fundamental aspect pervading through different assessment years”. However, AO could not have proceeded on an “assumption” that facts had remained unchanged and that the business model had remained unaltered.
