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02-12-2019, ROLLS-ROYCE PLC, Section 9(1), HIGH COURT OF DELHI
Asstt. Year - 2004-05, 2005-06, 2006-07, 2007-08 & 2009-10
PER : VIPIN SANGHI, J. (Oral)
1. The present appeal is preferred by the assessee against the common order passed by the Income Tax Tribunal Delhi Bench “I-2” New Delhi dated 28th May, 2019, in several ITAs preferred before it, pertaining to the assessment years 2004-05, 2005-06, 2006-07, 2007-08 & 2009-10. The Tribunal has rejected the said appeals preferred by the appellant, inter alia, on the premise that this Court has held in favour of the revenue vide its decision dated 30th August, 2011 reported as  13 taxmann.com 233 (Delhi) Rolls Royce PLC vs. Director of Income-tax (International Taxation) that the RollsRoyce India Ltd (hereinafter referred to as „RRIL‟), a hundred percent subsidiary of the appellant, constituted Permanent Establishment (hereinafter referred to as „PE‟) of the appellant/assessee in India. The Tribunal took note of the fact that the appeal of the appellant against the said decision of this Court is pending consideration before the Supreme Court.
2. Mr. Billimoria, learned counsel for the appellant submits that the Tribunal has erred in proceedings on the basis of the said decision of the High Court, since in taxation matters, concept of res judicata does not apply and each assessment year has to be treated separately and the issues arising in each year have to be considered and examined separately. In this regard he placed reliance on the decision of the Supreme Court in M.M.Ipoh vs. Commissioner of Income Tax  67 ITR 106 (SC). He submits that the Supreme Court decision in Formula World Championship Ltd. vs. Commissioner of Income Tax, (International Taxation)-3 Delhi (2017) 394 ITR 80 was rendered after the earlier decision of this Court in the case of the appellant/assessee. He submits that the issue-whether RRIL constitutes PE of the appellant in the light of that decision, needs examination afresh. His further submission is that on the same set of facts, the liaison office of RRIL has been held to be the PE of the appellant, as well as that of RRIL, which is not possible.
3. We have no difficulty in accepting the legal proposition laid down in M.M.Ipoh (supra). However, it was for the appellant to point out as to how the facts pertaining to the relevant assessment years were different from the facts on which the decision was rendered against the assessee, holding that RRIL constituted PE of the assessee in India.
4. The earlier decision against the appellant-assessee, holding that RRIL constituted its PE in India, pertains to the assessment years 1997-98 to 2003- 04. The present appeal pertains to the assessment year 2004-05. The appellant has not been able to point out any pertinent difference in facts prevailing in the assessment year in question, and the assessment years to which the decision of this Court relates.
5. A perusal of the impugned order shows that the Tribunal has, in fact, considered and rejected the same arguments as advanced by the appellant before it. We may extract the relevant portion of the impugned order in this regard:
“10. We have heard the rival submissions and also perused the relevant findings given in the impugned orders as well as material referred to before us. Ld. Counsel for the assesse had set out various reasons as to why RRPL cannot be said to having any PE in India mainly for the reason that, it was only supplying aero-engines and spare parts to the Indian customers on principal to principal basis. The service agreement for carrying out various other technical services was between RRIL and RR International and RRIL for has set up a liaison office in India to undertake the relevant service in India, for which was compensated on mark up basis. Thus, the activities of the all the three entities were entirely different. The liaison office of RRIL was neither negotiating any contract for sales nor was carrying out any activity relating to sales. Neither the LO was in any manner at the disposal of RRPL even for its employees. Thus, in view of the judgment of Hon 'ble Supreme Court in the case of Formula World Championship Ltd. v. Commissioner of Income-tax, (International Taxation)-3, Delhi, (supra) and ADIT vs. E funds IT Solution Inc., (supra), there cannot be any PE in form of LO. Even though we may slightly feel persuaded by his argument that PE has to be seen qua the activities carried by a foreign enterprise in India through a fixed place business or nay such place which is at its disposal, however, precisely the same issue had come up for consideration in assessee’s own case before this Tribunal on similar set of facts, wherein Tribunal after detailed reasoning and finding has held that the liaison office of RRIL also constitutes a PE for the assesse, i.e., RRPL in India. The Hon'ble Delhi High Court though has upheld the order of the Tribunal, however has noted that the issue of PE was not pressed or argued. Now that this matter is pending before the Hon 'ble Supreme Court as informed by the Ld. Counsel, therefore, as a matter of judicial precedence, we cannot take a different view and decide the issue a fresh taking any other view. Another set of argument placed by the ld. counsel before us is that the PE of assessee was in fact liaison office of RRIL in India, which is separately assessed to tax in India and its profit and taxability now has attained finality in the form of agreement under MAP. It was also submitted that notwithstanding whether there IS any independent PE of assessee in India or not, but the same activities arising from the same set of facts as alleged by the Revenue cannot give rise to two PEs, i.e., one PE for the assesse and another PE for RRIL. To canvass this point the ld. counsel has drawn our attention to the various findings of ld. CIT(A) in the case of RRIL and remand report of AO as contained in the appellate order dated 15.02.2009. He has pointed out that in the said order the ld. CIT(A) has relied upon same contents of report of survey conducted at the LO office of RRIL and exactly the same material has again been used in the case of the assessee also; and therefore, for the same activity there cannot be two PEs for two different entities. As culled out from the records, the survey of RRIL office in India had revealed certain facts which has been used by the Revenue authorities for holding that Rolls Royce Group has a PE in India. The contents of the survey have been discussed by this Tribunal in its order and have reached to the following conclusion:-