International Taxation -1 Vs Adobe Systems Software Ireland Ltd (Delhi High Court)
In a recent ruling Hon’ble Delhi HC dismissed appeals filed by revenue after considering the tribunal’s order who allowed assessee’s appeal after considering that since the transactions between the assessee and its Indian AE has been found to be at Arm’s Length in the transfer pricing adjustment, no further attribution can be made to the PE of the assessee as claimed.
Respondent/assessee is a Irish company. It accordingly claimed benefits of the India-Ireland DTAA. ADIR is a wholly owned subsidiary of Adobe Software Trading Company Limited and Adobe Systems Incorporated is the ultimate parent company of ADIR. Adobe USA also had a subsidiary in India known as Adobe Systems India Pvt. Ltd. AO as well as CIT (A) had essentially taken the position that Adobe India constituted not only a Fixed Place Permanent Establishment but was also liable to be recognized as a Dependent Agent PE. ITAT held that since the income attributable to the PE had already been subjected to tax, no further exercise was liable to be undertaken.
Revenue submitted that since all the functions performed and risks assumed by Adobe India had not formed subject matter of examination in the course of the TP Analysis, the mere attribution of profits to the PE would have not justified the Tribunal in proceeding to interfere with the views that were expressed by the lower authorities.
