Facts
- The applicant, Laird Technologies India Pvt. Ltd. is engaged in the business of designing and manufacturing antenna and battery packs for mobile phone industry. The applicant is part of Laird PLC, UK group. Another group company viz. Laird Technologies Inc., USA (Laird-US) had negotiated a Product Purchase Agreement (PPA) with Nokia Corporation, Finland to supply the products globally including in India. The PPA was entered into between Laird-US and its affiliates (as one part) and Nokia Corporation, Finland and its affiliates (as other part).
- Laird-US entered into an assignment agreement with the applicant for irrevocably assigning all its beneficial rights, title, interest, obligations and duties related to supply of products to Nokia-India under the PPA for a period of 5 years. In pursuant of the above assignment agreement, the applicant agreed to pay a lump sum consideration of USD 5,300,000 to Laird-US.
- The applicant was of the view that since the assignment agreement is executed outside India and the capital asset being right in PPA was located and transferred outside India, there is no taxable income either on accrual or receipt basis in India. Accordingly the applicant is not required to withhold tax from such payment pursuant to the assignment agreement.
Contentions of the Revenue
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