We are pleased to release an alert which summarizes a recent interim order of Delhi Income tax Appellate Tribunal (Tribunal) in case of one of the entities of the GE Group.
The issue before the Tribunal was on admission as additional evidence, the information gathered from LinkedIn profiles of certain employees of the GE Group by the Tax Authority for determining whether the concerned GE Group entity, through its offices or through its Indian affiliate i.e. GE India Industrial Pvt. Ltd. (Indian affiliate), constituted Permanent Establishment (PE) in India.
The Tribunal admitted the evidence on the ground that same has a considerable bearing on facts where the taxpayer has not furnished appropriate details which were sought for. The Tribunal held that these profile details are similar to statements given by a person and, it cannot therefore be said, to be hearsay evidence. Further, the taxpayer is free to refute information contained in the profiles by bringing on record contrary facts to dislodge the claims made by the Tax Authority. The Tribunal, in this interim order, did not conclude on existence of the PE and has fixed the matter for further hearing on merits.
Social network platforms such as LinkedIn are often used by employees for publishing professional information, their job profile, job achievements etc. This may also include information about the company they work for and, hence, nature of presence and profile of activities of the employer entity which are made available in public domain through such employees. The Tax Authority’s proactive attitude in mining information available in public domain and its use in conduct of tax audit have been highlights of recent trend in tax administration across the globe and India is no exception. It is true that the Tax Authority is obligated to grant opportunity of hearing to the taxpayer before any such information is used against the taxpayer. The onus of substantiating facts and refuting any such contents with better evidence is on the taxpayer. This also highlights the need for appropriate health check of such information on a contemporaneous basis to avoid scope for unintended tax challenges.
The issue before the Tribunal was on admission as additional evidence, the information gathered from LinkedIn profiles of certain employees of the GE Group by the Tax Authority for determining whether the concerned GE Group entity, through its offices or through its Indian affiliate i.e. GE India Industrial Pvt. Ltd. (Indian affiliate), constituted Permanent Establishment (PE) in India.
The Tribunal admitted the evidence on the ground that same has a considerable bearing on facts where the taxpayer has not furnished appropriate details which were sought for. The Tribunal held that these profile details are similar to statements given by a person and, it cannot therefore be said, to be hearsay evidence. Further, the taxpayer is free to refute information contained in the profiles by bringing on record contrary facts to dislodge the claims made by the Tax Authority. The Tribunal, in this interim order, did not conclude on existence of the PE and has fixed the matter for further hearing on merits.
Social network platforms such as LinkedIn are often used by employees for publishing professional information, their job profile, job achievements etc. This may also include information about the company they work for and, hence, nature of presence and profile of activities of the employer entity which are made available in public domain through such employees. The Tax Authority’s proactive attitude in mining information available in public domain and its use in conduct of tax audit have been highlights of recent trend in tax administration across the globe and India is no exception. It is true that the Tax Authority is obligated to grant opportunity of hearing to the taxpayer before any such information is used against the taxpayer. The onus of substantiating facts and refuting any such contents with better evidence is on the taxpayer. This also highlights the need for appropriate health check of such information on a contemporaneous basis to avoid scope for unintended tax challenges.
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