ACIT vs Mitsui And Co. Ltd
The assessee is a company incorporated in Japan and is one of biggest trading houses of the world. Rejecting the various explanations given by the assessee, the AO held that Mitsui India Pvt. Ltd (MIPL) is Dependent Agent Permanent Establishment (DAPE) of Mitsui & Co. Japan. In appeal the Ld. CIT(A) upheld the view of the AO that MIPL has been constituted as a DAPE of the assessee company in India.
Hon’ble Delhi High Court in the case of Director of Income Tax And Others Versus M/s. E Funds IT Solution and Others lays down certain criteria on the same:
(a) habitually exercises the authority to conclude contracts
(b) habitually maintains stock of goods or merchandise
(c) habitually secures orders in the said country
Transactions between a foreign enterprise and an independent agent, do not result in establishment of a permanent establishment if the independent agent is acting in ordinary course of their business.
Following the consistent decisions of the Tribunal in assessee’s own case in the preceding assessment years and in absence of any contrary material brought to our notice against the decision of the Tribunal Delhi ITAT holds that MIPL is not a Dependent Agency Permanent Establishment of the assessee. Further held that no further profit could be attributed.