Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2018 Supreme(SC) 582

SUPREME COURT OF INDIA
ADARSH KUMAR GOEL, ROHINTON FALI NARIMAN, NAVIN SINHA, JJ.
Honda Motor Co. Ltd., Japan, Through Its Authorised Representative - Appellant
Versus
Asstt. Director of Income-Tax, Noida & Ors. - Respondents
Civil Appeal Nos. 2833, 2834, 2835, 2836, 2837, 2838, 2839 & 2840 of 2018 (Arising out of SLP (C) No. 25363, 26978, 26841, 26829, 26826, 26803 of 2014; 7526 & 8142 of 2015)
Decided On : 14-03-2018

Advocates:
Advocate Appeared:
For the Appellant : Mr. Parag Tripathi, Mr. Tarun Gulati, Mr. Kishore Kunal, Mr. Pranav Bansal, Mr. Prashant Tahiliani, Ms. Anshul Verma, Mr. Abhishek Boob, Mr. R. Chandrachud, Mr. Shashi Mathews
For the Respondents: Mr. Y.P. Adhyaru, Mr. H.R. Rao, Mr. Arijit Prasad, Mr. T.M. Singh, Mr. Pravesh Thakur, Mrs. Anil Katiyar, Mr. S.A. Haseeb, Mr. Arun Kumar Singh, Mr. Niranjana Singh

Once arm's length principle has been satisfied, no further profit can be attributed to a person even if it has a permanent establishment in India.

Headnote:
Arm's Length Principle - Permanent Establishment - Once arm's length principle has been satisfied, there can be no further profit attributable to a person even if it has a permanent establishment in India.
Fact of the Case:

The impugned notice for reassessment is based on the allegation that the appellant(s) has a permanent establishment in India.
Finding of the Court:

The impugned order(s) is set aside and the appeals are allowed as the arm's length price procedure has been followed, and there can be no further profit attributable to a person once the arm's length principle has been satisfied.
Issues: Allegation of permanent establishment in India and the application of the arm's length principle.
Ratio Decidendi: Once arm's length principle has been satisfied, no further profit can be attributed to a person even if it has a permanent establishment in India.
Final Decision: The impugned order(s) is set aside and the appeals are allowed.

ORDER :

Leave granted.

2. We have heard learned counsel for the parties and perused the record.

3. In the judgment of this Court dated 24th October, 2017 in Assistant Director of Income Tax-I, New Delhi v. M/s. E-Funds IT Soluction Inc., Civil Appeal NO.6082 of 2015 and connected matters, it has been held that once arm's length principle has been satisfied, there can be no further profit attributable to a person even if it has a permanent establishment in India.

4. Since the impugned notice for the reassessment is based only on the allegation that the appellant(s) has permanent establishment in India, the notice cannot be sustained once arm's length price procedure has been followed.

5. Accordingly, the impugned order(s) is set aside and the appeals are allowed.

6. Learned counsel for the Revenue states that he does not have complete instructions. If the Revenue disputes the above factual position, it will be at liberty to move this Court.

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