This Tax Alert summarizes a recent ruling of the Authority for Advance Rulings (AAR) in the case of Ernst and Young Pvt. Ltd. (Applicant) on the taxability of payments made for support services provided by an affiliate in the UK to the Applicant. The AAR held that the provision of support services does not ‘make available’ any technology to the Applicant and, hence, the payments made are not taxable in India as ‘fees for technical services’ (FTS) under the India-UK tax treaty (Tax Treaty).
The Authority for Advance Rulings (AAR) in the case of E*Trade Mauritius Ltd. (AAR No. 826 of 2009) has held that that capital gains arising from the sale of shares in an Indian company would be exempt from tax in India under Article 13(4) of the India-Mauritius Tax Treaty (tax treaty).
Recently, the Authority for Advance Rulings (AAR) in the case of Royal Bank of Canada (A.A.R No 816 of 2009) has held that the profits / losses on futures and options contracts (derivative transactions) carried out by Canadian entity would be in the nature of ‘Business Income’. Further since the entity did not have a Permanent Establishment (PE) in India, as per Article 5 of the India-Canada tax treaty (the tax treaty), the Business Income of the applicant would not be taxable in India.
In the light of the foregoing, the question is answered in the negative. To elaborate, the applicant being a non-resident during the previous year 2008-09, the income earned by him from his employment in USA can not be taxed under Income-tax Act, 1961.
The AAR held that the amount received by the applicant is taxable as FTS in India mainly because the responsibility of the German company was not limited to the supply of the drawing and design, rather as provided in the agreement, the German company would remain the consultant throughout the period of work by offering such services as may be required from time to time.
Recently, the Authority of Advance Ruling (AAR) has held in the case of Shri Anurag Chaudhary (AAR No. 839 of 2009) that an employee who has left India for the purpose of employment outside India would qualify as a non resident, if he was present in India for less than 182 days during a financial year (From 1st April to 31St March) . Further, it was held that the salary earned on account of employment outside India would not be taxable in India.
The applicant is a company incorporated in Russia and also is tax resident of that country. It is one of the leading companies in the field of power project construction and export of electric power and is further engaged in the business of construction and commissioning of power project. In response to the tender floated by the National Thermal Po
AAR Ruling: Architectural services provided by a limited partnership is liable to tax as “fees for technical / included services” as per the provisions of India-US Double Taxation Avoidance Agreement [HMS Real Estate Pvt. Ltd. (A.A.R. No. 832 of 2009)].
The applicant, a resident of Mauritius, was a subsidiary of a USA company. It received capital contribution and loans from the USA parent which were used to purchase shares in ILFS, an Indian company. On sale of the shares, the applicant earned capital gains which were chargeable to tax under the Act.
Authority for Advance Rulings (AAR) [2010-TIOL-07- ARA-IT] in the case of Amiantit International Holding Ltd. (Applicant) on the issue of whether the transfer of shares held by the Applicant in an Indian company, to its Cyprus-based 100% subsidiary under a re-organization scheme, is taxable as per the provisions of the Indian Tax Law (ITL)
