QlikTech International ABC/o QlikTech India Pvt. Ltd. Vs DCIT (ITAT Bangalore)
The Bangalore Income Tax Appellate Tribunal (ITAT) has set aside the Assessing Officer’s (AO) classification of QlikTech India Private Limited as a dependent agent permanent establishment (PE) of QlikTech International. The decision, rendered on December 16, 2024, stems from an appeal filed by QlikTech International against an order by the Deputy Commissioner of Income Tax (DCIT) for the assessment year 2021-22. The core dispute revolved around the taxability of income earned by the foreign company from its Indian subsidiary.
The AO, based on master distribution and service agreements, had concluded that QlikTech India acted as a dependent agent PE, as it identified customers, negotiated prices, and concluded contracts for the software products supplied by the parent company. This led to the AO taxing a portion of QlikTech International’s Indian revenue. However, the ITAT found that the Transfer Pricing Officer (TPO) order concerning QlikTech India for the same assessment year treated the software sales as outright transactions, subject to TPO adjustments. This contradicted the AO’s PE classification.
The ITAT emphasized that the TPO order, submitted as additional evidence, had not been verified by lower authorities. Therefore, the tribunal set aside the matter and directed the AO to conduct a fresh adjudication, specifically considering the TPO order and relevant legal provisions. This decision effectively nullified the previous PE classification and mandated a re-evaluation of the income’s taxability.
