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Mc Donald'S India (P) Ltd., New Delhi vs Department Of Income Tax on 18 March, 2015

"Examined the rival submissions. The short question of law to be adjudicated here as to whether the appellant has PE in India within the meaning of para 7(a) and para 7(c) of Article 5 of Indo Japan treaty (DTAA). Either side has given its argument which has been placed above in verbatim. The fact remains in the instant case that the appellant did not supply any document before the Revenue to prove that enquiries, proposals from the customers were received by it. Whether such act of appellant would ipso facto indicate that no such enquiries or proposals were performed is also to be decided but there is no shred of doubt that the appellant has grossly failed to discharge its onus which has been placed on it by the 9 ITA NO. 3005/Del/2011 statute itself. The Ld AO has brought on record that regarding the claim of the appellant that the consultant /contractor represent several price and are in contact with the appellant could not be verified as not a single documentary evidence in this respect was filed before the Revenue in spite of specific requisition. The AO has also come to the conclusion from the material evidence that business meeting will not be only for the purpose of direct sales by the appellant but also through the DAIPL. In absence of any such document the Revenue was constrained to conclude that DAIPL secured orders in India for the appellant, the appellant is the controlling authority for DAIPL and DAIPL also negotiates and finalizes the prices with the customers of the appellant in India. The authority for such act although not vested in them through any agreement but in all practical purposes they were deciding the prices and such prices later on confirmed by the appellant through document at a routine manner. It has been decisively held by a five member bench of Supreme Court in the case of Mc Donald v. CIT 154 ITR 148 (5C) that any colourable device to evade the tax would not exonerate the assessee from the ambit of taxation statute. Although no agreement was signed between the appellant and DAIPL in this regard but in reality the prices decided by DAIPL have been confirmed by the appellant and the Ld. AO has 10 ITA NO. 3005/Del/2011 rightly pierced through the veil to find the actual fact and such fact cannot be faulted.
Income Tax Appellate Tribunal - Delhi Cites 1 - Cited by 1 - Full Document
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