Brief of the case:
- The Hon’ble Bombay High Court in the case of B4U International Holdings held that the agents of the foreign company if not exclusively working for assessee and they are not decision makers with no power of concluding contracts and as such their activities being incidental in nature.
- Therefore, such agents cannot be treated as Dependent Agent Permanent Establishment (DAPE) of the assessee.
Facts of the case:
- The assessee is a foreign company incorporated in Mauritius engaged in telecasting of TV channels. It earned income from selling time slot to advertising from India.
- The assessee in its return of income not offered such income to tax on the belief that it did not have a permanent establishment in India, it is not liable to tax in India under Article 7 of the DTAA between India and Mauritius.
- The Assessing officer did not agree with the claim of assessee on the ground that the Indian companies are merely an extension of assessee and working in India as Dependent Agent.
Contention of the Revenue:
- The fact that the commission paid to the Indian company is on Arm length basis make the agents as dependent. It is why because the Indian companies are merely an extension of assessee.
- From the transfer pricing analysis angle, functions performed and the risks assumed by the agent in India indicate that agents are PE of India.
Contention of the Assessee:
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