Oracle Systems Corporation Vs ADIT (ITAT Delhi)
ITAT Delhi held that Oracle India Private Limited is an independent legal entity and existence of Oracle India Private Limited cannot be considered as permanent establishment of Oracle Systems Corporation. Hence, there is not question of attribution of profit to Permanent Establishment.
Facts- the assessee entered into a Software Support Service Agreement dated 1st June, 2003 with its 100% subsidiary in India namely Oracle India Pvt. Ltd., wherein the assessee has received royalty by way of 56% of the revenue transfers received by the Oracle India Pvt. Ltd. , and the aforesaid amount is admittedly offered to income-tax by the assessee in the return of income filed with the Department, but the authorities have brought to income-tax the said income @ 100% of the amount received by the OIPL. It is to be noted that the assessee has not offered to income-tax, income with respect to revenue transfers to OIPL pertaining to training, consultancy etc.
Assessee has also contested that the authorities below have invoked Article(s) 5(1), 5(2) 5(4) and 5(5) of the India-USA DTAA to hold that the assessee’s wholly owned subsidiary namely OIPL is a fixed place PE as well as service PE and also agency PE of the assessee in India, and accordingly profits attributable to said PE in India were brought to tax by authorities below in the hands of the assessee.
