This case, ITA No. 131/Del/2021, involves Samsung Electronics Co. Ltd, which faced challenges from the Income Tax Authorities in India concerning the establishment of a Permanent Establishment (PE) under the India-Korea DTAA. The appeal was heard through video conferencing by the Income Tax Appellate Tribunal, Delhi Bench ‘D’.
The appellant, Samsung Electronics Co. Ltd, is a company incorporated under the laws of South Korea and has its offices at Two Horizon Center, Gurgaon. The respondent is the Assistant Commissioner of Income Tax, International Taxation-3(1)(2), New Delhi.
The core issue was whether the secondment of expatriate employees by Samsung to its Indian subsidiary constituted a fixed place Permanent Establishment (PE) under the DTAA between India and Korea. The Tribunal, after reviewing previous assessments and definitions of PE under the DTAA, upheld that the activities performed did not constitute a PE. The Tribunal’s decision highlighted the importance of factual and circumstantial specificity in determining the existence of a PE.
The Tribunal meticulously analyzed the roles and functions of the seconded employees and the control exerted by the Indian subsidiary. It referred to the tribunal’s decisions in previous years where similar facts were examined, emphasizing consistency and judicial precedent in its ruling. The Tribunal also considered the definitions under the DTAA and relevant rulings by the Supreme Court of India.
The Tribunal ruled in favor of Samsung, stating that there was no fixed place PE of Samsung in India based on the activities of the seconded employees. This decision is significant as it clarifies aspects of the PE definition under the India-Korea DTAA, influencing how multinational corporations structure their operations in India.
The final judgment was pronounced on March 22, 2021, concluding that the seconded employees’ activities did not constitute a PE, and therefore, no additional tax liabilities arise under the circumstances discussed.
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