If certain activities are not really services but more in the nature of stewardship/shareholder activities, the amounts cannot be taxed in India in the absence of a permanent establishment (PE)

The applicant is a US-based manufacturer engaged in manufacturing of engineering goods and is also an R&D-based service provider. It entered a cost al ocation agreement with its India-based group company. The applicant raises invoices  on the Indian group company for services rendered based on  the formula given in the agreement. The question before the Authority for Advance Ruling was: “Whether payments made for availing services listed out in the agreement are taxable in India and if taxable whether it is liable to TDS under Section 195 of   the Act?

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