Income Tax Return due date extended to 7th September 2015
Brief of the case: The ITAT New Delhi in the case of Mitsubishi Corporation India has ruled that the non-discriminatory clause is not applicable only for the limited purpose of transfer pricing adjustments and other additions to income can be removed by taking benefit of non-discriminatory clause of India-Japan DTAA.
Facts of the case:
- Assessee company made purchases from its associated enterprise Mitusubishi Corporation Japan (MCJ) and its branches.
- Assessee remitted the payment on account of purchases to MCJ without deducting tax at source because as per assessee TDS is not applicable under the non-discriminatory clause of Article 24 of India – Japan DTAA.
- AO did not agree with the claim of assessee on the ground thatnon-discriminatory clause cannot be applied as the case is covered by Article 9 which provides that in case of transaction between Associated Enterprises (AEs)discriminatory clause is not applicable .
Contention of Assessee:
- Article 24 provides that for the purposes of determining the taxable profits of an Indian enterprise, any disbursements made to a Japanese enterprise shall be deductiblein the same manner as if it had been made to an Indian resident.
- Thus, for the purpose of claiming deduction of any disbursements the non-resident can be treated as resident and such treatment is termed as non-discrimination.
- The provisions of Act not provide for tax deduction at source for payment made to resident on account of purchases.
Contention of Revenue:
Paid content
Become a Basic or Premium Member, or log in if you are already a Basic or Premium member.
