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3. The case of assesse is that Adobe Systems Software Ireland Limited ("Appellant" or "ADIR") is a company incorporated under the laws of Ireland and is a tax resident of Ireland in accordance with the Double Taxation Avoidance Agreement ("DTAA" or "tax treaty") between India and Ireland. Therefore, it is entitled to the beneficial provisions of the India-Ireland DTAA. During the year under consideration, ADIR was a wholly owned subsidiary of Adobe Software Trading Company Limited ("ASTCL"). Adobe Systems Incorporated ("Adobe USA") was the ultimate parent company of ADIR. Adobe USA has a subsidiary in India known as Adobe Systems India Private Limited ("Adobe India") that provides marketing support services to ADIR. ADIR is primarily engaged in the distribution/supply of shrink-wrapped/off-the- shelf/electronically downloadable/ subscription-based computer software and services ("Adobe products") outside of North America, including India. During the year under consideration, it purchased the software from third-party turnkey manufacturers/ASTCL and supplied the Adobe products its non-exclusive Indian distributors/resellers/end-customers on a principal-to-principal basis, outside India. No further customization or modification is done by the Appellant. It is clarified that the Appellant itself does not undertake any R&D, development and manufacturing of software. It then supplies the Adobe products to its non- exclusive Indian distributors/resellers and end-customers on a principal-to- principal basis, outside India. The Indian distributors/resellers/end-customers take possession of the shrink-wrapped software at a warehouse in Singapore and are responsible for importation of such software into India. For electronic delivery of software ("ESD"), once the orders are placed and confirmed, via online systems, owned and operated by the Appellant outside of India (servers are located outside India), a notification email is sent to the customer to confirm the ESD product is available for download along with the serial number/tag and download instructions. It is claimed that whilst the Appellant still provides shrink wrapped software in some regions, a major portion of Adobe products is delivered electronically or via subscription of cloud-based offerings. The contracting and invoicing functions between ADIR and its Indian distributors/resellers and end-customers take place outside India. Furthermore, the sales consideration for supply of Adobe products is also received by ADIR directly in Ireland i.e. outside India. Therefore, all the business activities pertaining to contracting, purchase, sale and invoicing take place outside India. It is claimed that Adobe India is not involved in the sale and supply of software belonging to the Appellant. Adobe India does not enter into contracts with the distributors/resellers/end-customers on behalf of the Appellant. Adobe India is not authorised to negotiate contracts on behalf of the Appellant. Furthermore, Adobe India does not accept orders or execute agreements in the name of the Appellantor on its own behalf. Furthermore, Adobe India does not hold stock of any items provided to the distributors/resellers.

3.4 Thereafter, the Ld. AO had passed a draft assessment order dated December 30, 2022("impugned order") under section 144C of the Act, wherein it was alleged for the very first time that the Appellant is a conduit entity which is not entitled to the benefits under India-Ireland tax treaty and therefore, its income should be taxed as per India's domestic tax law.

3.5 Ld. AO had held that even as per the provisions of the India-Ireland tax treaty, the Appellant has a dependent agent PE in India in the form of Adobe India and that the premises of Adobe India also form a fixed place PE for the Appellant in India. In view of the above, the Ld. AO had attributed 35% of revenue earned by the Appellant from India to its PE in India (after allowing deduction for payments made by the Appellant to Adobe India on account of obtaining marketing support services). In addition to the above, the Ld. AO had also taxed the interest on income-tax refund amounting to Rs.16,26,89,778/- as per the normal rates prescribed under the provisions of the Act as opposed to the beneficial tax rate of 10% provided under Article 11 of the India-Ireland Double Taxation Avoidance Agreement ("DTAA" or "tax treaty") that was applied by the Appellant whilst filing its return of income.

5.1 On the issue of existence of a PE, it was held that the finding itself of existence of a PE is without any cogent reasons. Relevant extracts is reproduced below:-

"16. As regards the risk recoverable from distributors, the hypothesis that the risk is borne by Adobe India has also no basis. The documents clearly show that the collection from the customers is managed by the team Adobe Ireland. Thus, from the above, it is apparent that only on hypothesis and guess work and assigning of all sorts of imaginary motives by a few e-mails, the Ld. CIT(A) and therefore the Revenue is contending that the functions performed by Adobe India are much wider than the that as per the agreement and the transfer pricing analysis. We find that as discussed by us hereinabove these submissions are not at all cogent enough to warrant a view that the transfer pricing analysing done in the case of Adobe India does not adequately reflects functions performed and the risk assumed by the enterprise. In such a situation as held by Hon'ble Apex Court as above, there is no need to attribute any further profit as all functions and risk have been considered in the computation of Arm's Length Price in the case of Adobe India.

13. Thus, respectfully following the decisions of the Coordinate Bench in assessee's own case, as discussed above, as well as the ratio laid down by the Hon'ble Supreme Court in the decision cited before us, we delete the additions made in both the assessment years under dispute on the reasoning that the transactions between the assessee and its AE in Indian having been found to be at arm's length, no further profit can be attributed to the PE........"

AY 2020-21 (supra) "11. For the relevant AY, the case of the assesee was not referred to the TPO by the Ld. AO and hence it can be concluded that the transaction between the assessee and Adobe India is found to be at ALP which is confirmed from the transfer pricing study and transfer pricing report of Adobe India. Considering the factual matrix of the case and respectfully following the decisions (supra) of the Co-ordinate Bench of the Tribunal for earlier AYs as well as decisions (supra) of the Hon'ble Supreme Court in Morgan Stanley & Co. Inc. and E-Funds IT Solution Inc., we are of the considered view that once transfer pricing analysis of Adobe India has been undertaken and the ALP has been determined which has been accepted by the Ld. AO, nothing further would be left to be attributed to Adobe India as the alleged PE of the assessee in India and that accordingly would extinguish the need for attribution of any additional profits to the alleged PE of the assessee..."