Case Law Details
Gemological Institute of America Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that the Indian Subsidiary operating in an independent manner doesn’t constitute as a ‘Permanent Establishment (PE)‘ in India and hence income of the assessee is not allowable to be taxed in India.
Facts- The assessee has preferred the present appeal contesting that AO/ DRP have erred in assessing the total income of the Appellant at Rs. 4,30,87,11,440/- as against the returned income of Rs. 3,78,49,90,577/- thereby determining the tax liability of Rs. 1,97,08,89,750/- against the refund claimed of Rs. 3,01,18,510/- while returning the income for the year.
It is mainly contested that AO/ DRP have erred in holding that Appellant has a ‘Permanent Establishment’ in India.
Conclusion- There is no material to show that the assessee dictates to the Indian subsidiary as to what activities it is authorised to engage in. We have also noted earlier that the Indian subsidiary is operating in an independent manner and there is nothing to show that factually speaking the Indian subsidiary constitutes a PE of the assessee in India.
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