Quote On ITAT order by S. Vasudevan, Executive Partner Lakshmikumaran & Sridharan Attorneys

The ITAT has followed its orders for the earlier years to hold that once the Indian entity has been remunerated on arm’s length basis, no further profit attribution can be made in the hands of the non-resident entity by alleging that the Indian entity constitutes a Permanent Establishment (PE) of the non-resident. Moreover, the ITAT has also followed the Supreme Court ruling in E-funds case to hold that the mere fact the Indian entity is a 100% subsidiary of the non-resident or that the non-resident has outsourced its business entirely to the Indian entity cannot lead to a conclusion that there is a PE.