Case Law Details
Case Name : Asst. Commissioner of Income Tax Vs Karishma Global Mineral Pvt. Ltd. (ITAT Panaji)
Appeal Number : IT Appeal No.-66/2014
Date of Judgement/Order : 16/03/2015
Related Assessment Year :
Brief of the case: The ITAT Panaji in the case of ACIT Vs. Karishma Global Mineral Pvt. Ltd. held that the sales commission paid by assessee to Singapore based entity is not taxable in India as the same is business profits which cannot be taxed in the hands of foreign company under India – Singapore DTAA as the foreign company has no PE in India.
Facts of the case:
- The assessee paid sales commission to M/s. De Long Mineral & Logistics Pvt. Ltd. (a Singapore based co.) without deduction of tax at source.
- Assessee was of the view that the foreign company has no PE in India and, therefore, the commission is not taxable in India.
- AO did not accept the contention of assessee and disallowed the commission by treating the same as taxable in India as deemed to accrue or arise in India.
Contention of Revenue:
- Revenue supported the order of AO that the commission paid is taxable in India because the services are rendered in India.
- The services are rendered in India as the same are supportive to business of assessee carried in India.
Contention of Assessee:
- As per Sec 9(1) of the Act no income is deemed to accrue or arise in India as the non-resident agent has no PE in India.
- Further, the commission being business profits is not taxable in India as per Article 7 of India-Singapore DTAA in the absence of PE of non-resident agent in India.
Held by ITAT Panaji:
- The point of dispute is that whether the sales commission paid by assessee to Singapore based entity is chargeable to tax in India.
- As per Article 7 of India-Singapore DTAA the business profits of contracting state shall be taxable in India only when the enterprise has Permanent Establishment (PE) in India and the business is carried on through such PE.
- M/s. De Long Mineral & Logistics Pvt. Ltd. does not have permanent establishment in India and, therefore, the commission is not taxable in India as per Article 7.