DCIT Vs Hyundai Heavy Industries Ltd (ITAT Delhi)
Liaison Office Not a PE, Offshore Revenues & Interest Not Taxable in India – Revenue’s Appeals Against Hyundai Dismissed Completely
These three Revenue appeals arise from reassessment orders passed after remand by ITAT & subsequent relief granted by CIT(A). The core issues relate to (i) Whether the Assessee’s Mumbai Liaison Office constitutes a Permanent Establishment (PE) in India; (ii) Taxability of offshore revenues / Fees for Technical Services (FTS); (iii) Taxability of interest from Associated Enterprises (AE) under DTAA.
Liaison Office vs. Permanent Establishment (Grounds in all years):
Revenue argued that Mumbai office was not merely a liaison office but was invlved in accepting orders & executing pre-bid surveys. However, the Assessee contended that this issue has been consistently decided in its favour in earlier years. ITAT noted that the Hon’ble Uttarakhand High Court in Assessee’s own case (ITA No. 30/2011, AY 1998-99 to 2004-05) held that the Mumbai office is NOT a PE under Article 5(4)(e) of India-Korea DTAA. Respectfully following this binding precedent, ITAT held that Mumbai office remains a liaison office, not a PE. Therefore, Grounds of Revenue on PE were dismissed in all years.
Offshore Revenues / FTS (AY 2010-11 & 2011-12):
