Business income accruing or arising to the applicant can be taxed in India only in respect of such operations carried out in India – AAR

CTCI Overseas Corporation Ltd. In Re (AAR)- In the present case, though the applicant has a business connection in India, it has not carried out any part of the business relating to offshore supplies in India. Under the  deeming provision of section 9(1) read with Explanation 1(a), any business income accruing or arising to the applicant can be taxed in India only in respect of such operations carried out in India.

All that is income in the transaction for supplies has not arisen in India as the right, title, payments, etc, in the supplies have passed on to Petronet which is importing these supplies outside India. The applicant is not the owner of the supplies in India. The ownership vests with Petronet who imported these supplies. We may add that all such issues, including whether the contract is composite and indivisible, have been addressed in the case of IHHI and we are not free to travel outside the realm of the Supreme Court’s decision, especially in a case where such a question arises on offshore supplies. We may clarify that our ruling on offshore supplies does not include offshore services which may be included therein.We therefore rule on the questions posed that the amount received/receivable by the applicant from Petronet for offshore supplies in terms of the contract dated 17.11.2009 is not liable to tax in India under the provisions of the Act, in view of the decision of Supreme Court in IHHI.

AUTHORITY FOR ADVANCE RULINGS (INCOME TAX), NEW DELHI

1st Day of February, 2012

Please become a Premium member. If you are already a Premium member, login here to access the full content.