Case Law Details
ADIT Vs Asia Today Limited (ITAT Mumbai)
Facts- Main issue involved is the assessee claim that it is a foreign telecasting company incorporated in Mauritius and having a tax residency certificate of the Mauritius. It sells advertising time and collects subscription revenues through its Indian affiliates Zee Telefilms Limited and El Zee, but its claim was that since it does not have any permanent establishment in India, no part of its income was taxable in India. whereas, AO did not accept the claim. He was of the view that its Indian agent constitute virtual projection of the foreign company, and, therefore, it has a permanent establishment in India.
The question thus arises as to what are the tax implications of the existence of a dependent agent permanent establishment (DAPE) under Article 5(4).
Conclusion- In the light of Hon’ble jurisdictional High Court’s judgment in the case of Set Satellite, so far as profit attribution of a DAPE is concerned, the legal position is that as long as an agent is paid an arm’s length remuneration for the services rendered, nothing survives for taxation in the hands of the dependent agency permanent establishment. Viewed thus, the existence of a dependent agency permanent establishment is wholly tax neutral.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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