Ingram Micro (India) Exports Pte. Ltd. Vs DCIT (ITAT Mumbai)
TPO Cannot Wear the AO’s Hat: Determination of PE Falls Outside the Limited Jurisdiction U/s 92CA
Summary: The Mumbai Bench of the ITAT has held that a Transfer Pricing Officer cannot determine the existence of a Permanent Establishment of a foreign enterprise in India. The jurisdiction of the TPO u/s 92CA is confined to determining the Arm’s Length Price of an identified international transaction. Questions concerning the existence of a PE under Article 5 of a tax treaty and the consequent taxation of business profits under Article 7 are matters falling within the jurisdiction of the AO.
Ingram Micro (India) Exports Pte. Ltd. was a company incorporated in Singapore and a wholly owned subsidiary of Ingram Micro India Pvt. Ltd. (“IMIPL”). The assessee was established for expanding the Ingram Micro group’s customer base in India, Bangladesh & Sri Lanka and for supplying products to certain Indian customers intending to avail customs-duty exemptions.
The assessee claimed that its management and day-to-day business operations were conducted from Singapore. It obtained certain sales-processing, marketing and bookkeeping support from IMIPL. According to the assessee, IMIPL was remunerated for these services through rebate incentives directly paid to it by third-party vendors.
