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Abstract
On the issue of attribution, the taxpayer relied on the Supreme Court of India's decision in DIT (IT) v Morgan Stanley 2007 (292) ITR 416 (SC), where it was held that once a transfer pricing analysis is done, there is no further need to attribute profits to a PE, which is an associated enterprise compensated on an arm's-length basis, taking into account all the functions performed and risks assumed by the enterprise.The commission paid was based on the Indian subsidiary performing only two functions, i.e. the forwarding of customer requests and the taxpayer's quotations/proposals.Since several other functions were actually performed by the India subsidiary, the commission paid did not take into account all functions performed; and The non-resident taxpayer had neither undertaken a transfer pricing analysis, maintained documents nor reported its international transactions to the tax authorities.[...]the tribunal concluded that such payment did not extinguish the tax liability of the non-resident taxpayer in India.