Fixed placed PE or agency placed PE in India is must to determine taxability

DCIT Vs Western Union Financial Services Inc. (ITAT Delhi)

Conclusion: In present facts of the case, the Hon’ble Tribunal relied upon the previous Judgments passed in the assesse own case and have observed that agents of the assessee did not have the necessary authority to conclude the contracts of the assessee and, on that premise, it was held that there is no agency PE of  assessee in India and therefore Assessee was not taxable in India.

Facts: The brief facts of the case are that the assessee is a non-resident company registered in USA. It is engaged in the business of rendering money transfer services. The business of the assessee includes transfer of monies across international borders. For the purpose of carrying out its business in India, the assessee had entered into agreements appointing agents in India. There are four types of agents (i) Department of Posts (ii) commercial banks (iii) non-banking financial companies and (iv) tour operators.

The return of income for the year under consideration was filed declaring total income at Rs.1,34,90,540/-. During the course of assessment proceedings, the Assessing Officer reached a conclusion that the assessee company had a Permanent Establishment (PE) in India under Article 5 of India US-Double Taxation Avoidance Agreement (DTAA) in the form of fixed placed PE due to usage of software developed and owned by the assessee in India. The Assessing Officer also noted that there was existence of agency PE on account of agents working in India. Accordingly, the Assessing Officer held that commission income earned by the assessee from its operations in India was taxable in India. The Assessing Officer went on to attribute 50% of the profits earned by the assessee on funds remitted to India.

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