Taxability of Income of a non-resident shipping company can in India
Dec 20, 2009 Income Tax Case Laws
SUMMARY OF CASE LAW
Merely because assessee is doing booking of different cruise tour packages for a foreign company, that cannot per se be decisive for holding that said foreign company is having “business connection” in India within the meaning of section9(1)( i)
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Tags: bench, business connection, compass, cruise operations, cruise packages, cruise tour, foreign countries, india travel, indian territory, international waters, RBI, scml, star cruises, submissions, travel services
Analysis of Circular no. 7/2009 issued to withdraw earlier circular pertaining to non-resident taxation
Dec 10, 2009 Income Tax
The Central Board of Direct Taxes (CBDT) had earlier issued a circular (Circular No. 23 dated July 23, 1969) clarifying the India tax liability of non-residents in respect of income accruing or arising through or from, a business connection in India. As per the aforesaid Circular 23, even if a business connection existed under section 9 of the Income-tax Act, 1961 (“the Act”), only so much of the profit which can be reasonably attributed to the operations of the business carried out in India could be subject to tax in India. Circular 23 also provided clarifications on the taxability of non-residents in specific situations.
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Tags: business connection, CBDT, direct taxes, income tax act, income tax act 1961, india tax, indian importer, indian importers, non residents, principal basis, resident agents, tax liability, tax payers
Procurement of orders by South African company for Indian company on commission basis is not taxable in India
Dec 6, 2009 Income Tax Case Laws
S. 9, Treaty with South Africa; in favor of taxpayer: – Z, a South African company, offered to promote and market the products of the taxpayer, an Indian company, on commission basis. Z will procure and negotiate orders and forward these to the taxpayer. The taxpayer will execute the orders directly and will receive the consideration in India. Z will render all services outside India and will not maintain any PE in India.
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Tags: advance rulings, business connection, business operations, business profits, commission basis, procurement, south africa, south african company, withholding tax liability
Withdrawal of circular related to taxability of income accruing or arising through, or from, business connection in India to a non-resident
Oct 25, 2009 Income Tax
Section 9 of the Income-tax Act, 1961 – Income – Deemed to accrue or arise in India – Withdrawal of Circulars No. 23 dated 23rd July, 1969, No. 163 dated 29th May, 1975 and No. 786 dated 7th February, 2000.
Circular No. 7/2009 [F. No. 500/135/2007- FTD-I], dated 22-10-2009
The Central Board of Direct Taxes had issued Circular No. 23 (hereinafter called “the Circular”) on 23rd July 1969 regarding taxability of income accruing or arising through, or from, business connection in India to a non-resident, under section 9 of the Income-tax Act, 1961.
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Tags: business connection, circulars, clarification, direct taxes, income tax act, income tax act 1961, Income tax department, india, intention, issuance, petition, petitions, prejudice, provisions, section 9, taxpayers
Ishikawajima-Harima is still good law despite retrospective amendment: Karnataka High Court
Aug 30, 2009 Income Tax Case Laws
Jindal Thermal Power vs. DCIT (Karnataka High Court)
The assessee entered into a contract with Raytheon – Ebasco, a foreign company, and two of its’ foreign subsidiaries, for commissioning of a power plant. The assessee made payments to Raytheon for rendering technical services, providing ‘start-up’ services and taking ‘overall responsibility’ for the Project. The two foreign subsidiaries of Raytheon carried on onshore services. The technical services were rendered by Raytheon wholly outside India and it supervised the carrying on of the ‘start up’ services by its subsidiaries. The assessee did not deduct tax at source on payments to Raytheon and the AO held it to be liable u/s 195 r.w.s 201.
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Tags: business connection, consequences, finance act, foreign subsidiaries, ishikawajima harima, onshore services, place of business, power plant, raytheon, tax liability
Sale of equipment to an Indian party by a foreign company cannot be construed as resulting into any business connection in India
Aug 24, 2009 Income Tax Case Laws
SUMMARY OF CASE LAW
The mere fact that the assessee effected sale of equipment to an Indian party, that in itself, cannot be construed as resulting into any business connection in India; even if there is a business connection of the non-resident in India, then also only that part of the income shall be deemed to accrue or arise in India which is relatable to the operations carried out in India.
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Tags: business connection, Income Tax, Letter of Credit, offshore equipment, offshore supplies, offshore supply, taxation, xelo
Taxability of commission paid by Indian Company to foreign company to promote its business in that country
Aug 6, 2009 Income Tax
The Authority for Advanced Ruling has ruled that if an Indian company pays a commission to an overseas company to promote its business in that country, such payment will not be taxable in India.
The AAR, a quasi judicial body on matters of taxation, in a ruling on July 29, also held that the expenditure incurred by an Indian company towards the payment of commission to a foreign agent is an ‘allowable expenditure’. The AAR gave its verdict on an application filed by the Chennai-based Spahi Projects, in connection with commission that it paid to South Africa’s Zaikog Trading Company.
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Tags: AAR, business connection, direct taxes, foreign agent, foreign commission, independent authority, indian company, resident agent, south african company, south african market, taxation
Rectification of order passed by tribunal under section 254(2) of IT Act, 1961
Jul 18, 2009 Income Tax Case Laws
SUMMARY OF CASE LAW
If the Tribunal has consciously come to the conclusion that no income accrues in India and in respect of which elaborate reasons are given, if the applicant does not agree with the reasoning, it cannot be said that any mistake has crept in the order of the Tribunal which is rectifiable under section 254(2).
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Tags: bench, business connection, case law, mistake, rectification, rectification of mistakes, tribunal, under section 254(2)