The Supreme Court has remanded the income tax department’s appeal raising pertinent issues related to taxability of foreign telecasting companies to the Bombay High Court.The issue revolves around the method of computation of profits by non-resident firms from their Indian operations especially those which don’t have branch offices or permanent establishments in India or are not maintaining country-wise accounts of their operations. The Bench headed by Chief Justice SH Kapadia has remanded matter to the Bombay High Court after the revenue submitted that the issue was not covered by the Pfizer Corporation’s judgement. It directed the department to move the high court within four weeks.
The revenue argued that the issue involved in the case of Pfizer Corporation was distinguishable from the Asia Today’s case as the former dealt with whether dividend paid to a non-resident company was taxable in the year of declaration or in a year in which the RBI had granted permission for remittance abroad.
However, Asia Today’s matter relates to an advertisement income which is deemed to accrue or arise in India in terms of Section 9(1)(i) of the Income Tax Act, it said. During 2000-01, the non-resident firm had raised invoices of more than Rs 10.74 crore but had offered income of only Rs 69.76 lakh on cash basis.