Case Law Details
Commissioner of Income International Taxation Vs Alibaba.Com Singapore E-Commerce Private Ltd (Bombay High Court)
Conclusion: In present facts of the case, the Hon’ble High Court have upheld the Judgment of ITAT wherein it was observed that the tax residency certificate is sufficient to determine the proof of residency and the income-tax authorities cannot ignore the valid tax residency certificate issued by the Government authority of the other contracting state, that is, Singapore.
Facts: In present facts of the case, the Revenue was in appeal. The Respondent Assessee is a non-resident company incorporated in Singapore. The case was selected for scrutiny and assessed under section 143(3) read with section 144C (13) of the Income Tax Act FOR ay 2011-12. The AO assessed the returns of the Assessee at Rs.2,73,69,585/- by order dated April 28, 2015. The AO denied the benefit of the India-Singapore Double Tax Avoidance Agreement (DTAA) to the assessee by holding that the assessee is merely an intermediary between the Indian subscribers and one Alibaba.com Hong Kong Limited. The AO did not accept the certificate of incorporation and the Tax Residency Certificate (TRC) issued to the assessee by the authorities in Singapore.
The AO also held that the assessee had a ‘business connection’ in India by way of its agreement and transactions with M/s.Infomedia 18 Pvt. Ltd. (Infomedia) an Indian company, and therefore, the assessee’s income was taxable in India as per the provisions of section 9(1)(i) of the said Act. The Dispute Resolution Panel (DRP) confirmed the order of the AO in respect of denial of treaty benefit. The DRP also held Infomedia was a dependent agent permanent establishment (DAPE). The DRP accordingly held that there was a permanent establishment / business connection of the assessee in India and its income was taxable in India as a business profit / business income.
It was observed by the Hon’ble High Court that the assessee, com Singapore E-Commerce Private Ltd., is a company incorporated under the laws of Singapore and the same is evidenced from the certificate of incorporation. Since the entire control and management of the company is from Singapore, therefore, in terms of Article 4 of Indo-Singapore DTAA, it is a tax resident of Singapore, holding a valid ‘tax resident certificate’ which has been placed in the paper book. The entire structure of various holding companies of the ‘Alibaba.com Group’ shows the immediate holding company is ‘Alibaba.com International (BVI) Holding Ltd.’, a company incorporated in British Virgin Island and the ultimate holding company is ‘Alibaba.com Ltd.’, a company incorporated in Cayman Island.
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