In the case ITA No. 1930/DEL/2022 heard by the Income Tax Appellate Tribunal, Delhi Bench, Adobe Systems Software Ireland Limited contests the Indian tax authority’s final assessment orders for the 2019-20 assessment year. The core issue revolves around whether Adobe India qualifies as a dependent agent permanent establishment (DAPE) of the appellant, influencing the taxation of its business profits in India.
The tribunal, led by Shri G.S. Pannu, Hon’ble President, and Shri Saktijit Dey, Judicial Member, scrutinized the relationship between Adobe Systems Software Ireland and its Indian counterpart, Adobe India. The authorities had previously determined Adobe India as a DAPE, leading to a significant tax implication for the appellant. The case emphasizes the application of the Double Taxation Avoidance Agreement (DTAA) between India and Ireland and analyses whether profits from Adobe’s software sales and services, facilitated by Adobe India, should attract domestic taxes.
The decision reaffirms established judicial principles regarding the non-taxability of certain revenues if transactions between related parties are at arm’s length, as supported by transfer pricing analyses. This judgment is crucial for multinational corporations operating in India, setting a precedent on how DTAAs and corporate structures impact tax liabilities.
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