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02-09-2019, Nokia Corporation , Section 234B, 9(1)(vi), Tribunal Delhi

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1 week 4 days ago - 1 week 4 days ago #10686 by amit
Section - 234B, 9(1)(vi), 5, 9
Order Date - 02-09-2019
Favouring - Assessee
Court - Tribunal Delhi
Appellant - Nokia Corporation
Respondent - ADIT
Justice - Bhavnesh Saini JM & Dr. B. R. R. Kumar AM
Citation - 919Taxpundit17
Appeal No. - ITA No. 5819/Del/2010
Asstt. Year - 2007-08

Order

PER : Dr. B. R. R. Kumar

Since, the i ssues involved in all these appeal s are common , they were heard together and are being di sposed of f by common order. G round Nos. 2 & 6 are not pressed.

2. The assessee has rai sed the following grounds:

“1. Based on facts and ci rcumstan ces of the case and in law, the learned Commissioner of Incometax(Appeals) [hereinafter referred to as the CIT(A)] has erred in holding that the income earned by the appellant from supply of telecommunication equipment (comprising of hardware and software) to Indian telecom operators is taxable in India on the basis that the appellant has a Permanent Establishment (‘PE’) in India under the provisions of Article 5 of the Double Taxation Avoidance Agreement between India and Finland (“India-Finland tax treaty”).

2. Not pressed

3. Without prejudice, based on facts and circumstances of the case and in law, the ld. CIT (A) has erred in applying global net operating margin of 16.46 percent to estimate the income from supply o f telecommunication equipment.

4. Without prejudice, based on facts and circumstances of the case and in law, the ld. CIT (A) has erred in not considering the India specific Profit and Loss account furnished by the appellant, which reflected losses incurred from supplies made to customers in India.

5. Without prejudice, based on facts and circumstances of the case and in law, the ld. CIT (A) has erred in attributing 20 percent of the estimated income from supply of telecommunication equipment to the alleged PE in India, by completely ignoring the following facts submitted by the appellant:

(a) Supply contracts/purchase orders, being high value contracts, were ‘concluded/accepted’ outside India in view of the fact that the ‘power to conclude’ contracts vests with the Board of Directors/other approving authority of f the assessee based outside India at the registered of fice of the company in Helsinki (Finland).

(b) No supply contracts were signed in India.

(c) No income can be said to have accrued on account of mere signing of contracts, as upheld by the Hon’ble Supreme Cou rt in the case of Ishikawajima Harima Heavy Industries Co. Ltd . (288 ITR 408)

(d) The appellant’s role was limited to supply of telecom equipment and it did not have any role in network planning activities undertaken in India.

6. Not pressed

7. Based on facts and circumstances of the case and in law, the ld CIT (A) has erred in upholding the action of the learned asse ssing of ficer who has arbitrarily imputed Rs 50 ,000,000 as income f rom vendor financing and taxed the same in the hands of the appellant in India as business Income, without providing any Justification for Imputation of the said Income and without seeking any in formation and detail from the appellant nor providing any opportunity to the appellant to contest such addition.

8. Based on facts and circumstances of the case and in law, the learned CIT (A) has erred in relying upon the un founded allegations made by the learned assessing of ficer to hold a 'Fixed Place PE' of the appellant in India under the provisions of Article 5(1) of the India-Finland Tax Treaty, in respect of research & development ('R&D') activities undertaken by Nokia India Private Limited (Nokia India) in India for the appellant.

8.1 Without prejudice, based on facts and circumstances of the case and in law, the leaned CT (A) has erred in applying the profit margin rate of 21.42 percent on the total expenses incurred by Nokia India on R&D activities and attributing 100% of the same to the alleged PE of the appellant in India.

8.2 Without prejudice, based on facts and circumstances of the case and in law, the learned CIT (A) has erred in not appreciating that an arm’s length payment has been made by the appellant to Nokia India in respect of R&D ac tivities undertaken by Nokia India, which has already been of fered to tax in India by Nokia India.

8.3 Without prejudice based on facts and circumstances of the case and in law, the learned CIT (A) has erred in not allowing deduction for payments made by the appellant to Nokia India while computing the income from R&D activities undertaken in India.

9. Based on facts and circumstances of the case and In law, the learned CIT (A) has erred In upholding the levy of interest under section 2348 of the Income-tax Act, 1961, thereby ignoring the Judgment of the Hon'ble Tribunal In appellant's own case for AY 1997-98 and AY 1998-99.”

3. The Revenue has rai sed the following grounds:

“1. On the facts and circumstances of the case, Ld. CIT(A) has erred in attributing only 20% of profits to activity of the PE in India for supply of Hardware.

2. On the facts and circumstance s of the case, Ld. CIT(A) has erred in attributing only 20% of profits of activity of the PE in India for supply of Operating Systems Software.

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