Sec. 9(1)(i) of Income Tax Act, 1961—Income — Income deemed to accrue or arise in India - 35% of the profit attributed to the PE is justified as it was as per as agreed under the supply agreement.

Facts: A.O./ DRP has erroneously held that on facts, profit attributable in respect of supplies is 35% of the profit accruing from off shore supplies. The said attribution is arbitrary, highly excessive and has no rationale whatsoever, and is against the principles of attribution as laid down under the provisions of Income-tax Act, DTAA between India and Austria and various decisions of Hon’ble High Court, Supreme Court of India.

Held, that in addition to the marketing activities or engineering survey pre or post awarding of contract (for which no information has been filed by the assessee), the service PE has played role in assembling and bringing the equipment to deliverable state as agreed under the supply agreement. In such facts and circumstances, in our opinion, the 35% of the profit attributed to the PE is justified. Accordingly, we uphold the same - VOITH PAPER GMBH V/s DEPUTY CIT - [2020] 80 ITR (TRIB) 589 (ITAT-DELHI)