advance rulings

Recently, the Authority for Advance Rulings (AAR) in the case of Laird Technologies India Pvt. Ltd. [2010-TIOL-06-ARA-IT] has held that the fees received by the USA company for assigning contractual rights to the applicant for supply of products in India is taxable as business profits and in the absence of a Permanent Establishment (PE) such consideration is not taxable in India under the India-USA tax treaty (the tax treaty). Accordingly, Full Article

AAR Ruling: Referral fee received from an Indian based recruitment agency by a non-­resident is not liable to tax in India in view of the provisions of India-UK Double Taxation Avoidance Agreement [Real Resourcing Limited (AAR No. 828 of 2009)]. Full Article

Seagate Singapore International Headquarters Pvt. Ltd. (applicant) was engaged in the business of manufacture and sale of Hard Disk Drives (disks). It has been supplying disks to Original Equipment Manufacturers (OEMs) in India. In order to minimize the delays in the procurement of inputs from the applicant, the OEM proposed to put in place a Vendor Managed Inventory (VMI) model. Under the VMI model, Full Article

The profits derived from business of providing services in connection with the prospecting for or extraction or production of mineral oil are squarely and exclusively governed by Section 44BB, irrespective of the nature of services, provided the services are intimately connected to Prospecting and exploration of oil. Therefore the ruling in P6 of 1995 cannot be called in aid by the Revenue to sustain its plea. Full Article

The income by way of royalty accruing to the Japanese company is liable to be taxed in terms of Article 12 of the DTAA between India and Japan at a rate not exceeding 10 per cent from the assessment year 2008-09 onwards. Full Article

Income of foreign companies providing technical services and data to oil exploration and production companies in India will be taxed at a concessional rate, the Authority for Advance Rulings (AAR) on income tax has said in a recent decision. The ruling will be a big help to oil prospecting companies in India as they step up exploration activities, allowing them to avail of technical services and data more easily. Full Article

The services/activities provided by the American Institute to DRDO pursuant to the agreement entered into between FICCI and the American Institute do not fall within the purview of Article 12(4)(b) of the Indo-US DTAA and the payments received by the Institute under the agreement are not liable to be taxed as fees for technical services under the domestic law; consequently, FICCI is not required to deduct tax under section 195 for payments made by it to the American Inst.. Full Article

S. 9, Treaty with South Africa; in favor of taxpayer: - Z, a South African company, offered to promote and market the products of the taxpayer, an Indian company, on commission basis. Z will procure and negotiate orders and forward these to the taxpayer. The taxpayer will execute the orders directly and will receive the consideration in India. Z will render all services outside India and will not maintain any PE in India. Full Article