ITAT applies Nike’s case to hold that no tax leviable on Indian ‘LO’ engaged in procuring goods for export

The Tribunal held in favour of assessee as under:

1)   Tesco Hong Kong was invoiced for the goods and re-invoices the goods to the buyer without any mark up. It charges 5% commission on products sourced. The Indian Liaison office (‘LO’) of Tesco facilitates sourcing of goods by Tesco group companies;

2)   Therefore, in the instant case, other facts being more or less same as in Nike's case, the above facts satisfy the condition "for the purpose of export" in Explanation 1(b) to section 9(1)(i) more precisely than the facts of the Nike case, where Nike LO sourced goods for the affiliates from India as goods were purchased by the affiliates directly from the vendor in India and Nike Inc. didn't purchase by itself and sell to its subsidiaries, but, arranged for the purchase by Nike affiliates from India;

3)   As there was no evidence on record to suggest that Tesco's Indian LO indulged in commercial activities and that it was in fact a PE, exemption under Explanation 1(b) to section 9(1)(i) could not be denied - Tesco International Sourcing Ltd. v. Dy. DIT(International Taxation) [2014] 41 taxmann.com 241 (Bangalore - Trib.)