Mitsui Mining and Smelting Company Limited Vs ACIT (ITAT Delhi)
ITAT Delhi held that non-resident company assessee was not having any control over employees seconded by it to Indian entity and hence there cannot be any fixed place Permanent Establishment [PE] of the assessee in India. Accordingly, appeal allowed.
Facts- The assessee is a non-resident company. The assessee company is having a subsidiary in India, Mitsui Kinzoku Components India Private Limited. The subsidiary of India is engaged in the business of manufacturing Catalytic convertors and selling catalytic convertors in India. These convertors are used in automobile industries. The assesses herein before us used to provide certain precious metal/chemicals as Offshore sales to its India subsidiary.
The case of the assessee was selected for scrutiny. During the course of assessment proceedings, AO observed that the assessee has received royalty as well as fee for technical services from the Indian subsidiary, and has offered these amounts as its income for the impugned assessment year. AO further observed that assessee has received certain receipts from the Indian subsidiary on account of reimbursement of expat (seconded employees) remuneration. AO further observed that the assessee has seconded certain Japanees personal to its India subsidiary. It is an admitted position of fact that the seconded employees were getting salary from the Indian company and they were offering this salary income for taxation in India. These employees were getting part of their salary herein India and part of their salaries in Japan via present assessee. In simple terms, the Indian subsidiary is reimbursing that portion of salary which the assessee is paying to the seconded employee in Japan, on behalf of the Indian subsidiary. In the back drop of these facts, the Assessing Officer. after analyzing the agreements of seconded employees between assessee and the India subsidiary held that the employees of the assessee were exercising complete control over the physical premises of the Indian subsidiary and also carrying out sales operations in India and, hence, the assessee is having Permanent Establishment (PE) in India.
