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Judiciary

Consideration for assignment of supply agreement not taxable in the absence of Permanent Establishment in India

July 9, 2010 1261 Views 0 comment Print

The AAR upheld the contention that a transfer for the purpose of capital gain should be a legal transfer. The transfer of rights and obligations even if not binding on the third party are still binding on the parties to the agreement therefore consideration against the same could be treated as business profit. In absence of permanent establishment in India, consideration for assignment of supply agreement can not be taxable in India.

Research activities of branch office can lead to a ‘permanent establishment’ if not characterized as preparatory or auxiliary in nature

July 9, 2010 2416 Views 0 comment Print

Under the specific facts of the case the research activities were held to be in the nature of core business activities and not preparatory and auxiliary services so as to be covered in the exclusionary Article for Fixed Place PE.

Payment for sponsorship rights cannot be termed as royalty

July 9, 2010 2037 Views 0 comment Print

There was no transfer of copyright or the right to use the copyright by the foreign company to the tax payer and therefore the payment would not fall within article 13(3)(c) of the Tax Treaty. The reference in Article 13(3)(c) is to “any copyright” and it is not a reference to “any right”. Hence, the payment cannot be said to be in the nature of royalty payment.

Services provided for purchase of goods to be exported from India may not be eligible for exemption provided under Income-tax provisions

July 9, 2010 927 Views 0 comment Print

The sourcing activity of non-resident purchaser or an agent of such non-resident purchaser for exports of goods outside India will only be covered by the exclusion clause under deeming provisions of section 9(1 )(i) of ITA. A mere service provider may not be eligible to claim benefit of such an exclusion provision.

Payments towards workshop conducted for dissemination of information which is a part of study course cannot be termed as FIS

July 9, 2010 696 Views 0 comment Print

Payments towards workshops and learning programmes conducted by institutes, where no technical knowledge, experience or skills were shared or made available to the participants, could not be termed as “fees for included services”.

Payments for referral services cannot be termed as fees for technical services (FTS)

July 9, 2010 2760 Views 0 comment Print

The receipts in the nature of referral fees do not constitute “fee for technical services”. Further, in the absence of a PE in India, the same cannot be subject to tax in India.

Ultimate Holding Company should not be considered as beneficial owner of gains arising to Subsidiary Company on sale of investments held by such Subsidiary Company

July 9, 2010 2590 Views 0 comment Print

The applicant, a Dutch company was incorporated on 11 August 2008. On 6 November 2008, it acquired all the shares of an existing Indian company from another group company located in Germany. The shares were acquired for a consideration of INR 100 million.

FII’s Income from trading in futures and options is business income

July 9, 2010 3612 Views 0 comment Print

FII‘s income from trading in futures and options is in the nature of business income. Special provisions under the domestic tax laws i.e. Section 1 15AD does not preclude FII‘s from earning business income in India.

Mere reimbursement of costs based on a cost sharing agreement not liable to withholding tax

July 8, 2010 6828 Views 0 comment Print

ABB Limited, an Indian company (ABB India) and ABB Research Limited, Zurich, a Swiss company (ABB Zurich) are part of the ABB group. The group is engaged in the manufacturing of power products and systems technologies and has business activities across the globe in over 100 countries.

Consortium members working together with independent scope not an AOP

July 8, 2010 2930 Views 0 comment Print

Merely coming together and acting in cooperation with each other for the purpose of executing the work while each member carries on its own scope of work independently does not reasonably lead to the conclusion that an AOP has been formed.

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