Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: form 3cd :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: cpt :: articles on VAT and GST in India :: TDS :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: VAT Audit
« From the Courts »
 Shri Rakesh Kumar Gupta Vs. The Commissioner Of Income Tax-Xiii & Anr.
 Central Board Of Direct Taxes Vs. Satya Narain Shukla
 Meena Rastogi Vs. Central Board Of Direct Taxes, & Anr.
 Siddharth Rastogi Vs. Central Board Of Direct Taxes, Union Of India, Ministry Of Finance, Department Of Revenue & Anr.
 ITO vs. NVS Builders Pvt. Ltd (ITAT Delhi)
 Approva Systems Pvt. Ltd vs. DCIT (ITAT Pune)
 Procter & Gamble Home Products Pvt. Ltd vs. ITAT (Bombay High Court)
 Virag Tiwari Vs. Principal Commissioner Of Income Tax-21 & Others
  Anand Agarwal vs. Vilas Chandrakant Gaokar (Bombay High Court)
 Maxopp Investment Ltd vs. CIT (Supreme Court)
 Order of a Four-Member Appellate Authority constituted under Chartered Accountants Act is Valid: Delhi HC

Taxing liaison offices: Revenue to move HC
February, 20th 2009

Tribunal rules that the offices cannot be termed permanent establishments.

The revenue department has decided to challenge an Income Tax Appellate Tribunal (ITAT) order that liaison offices of foreign firms operating in India cannot be termed as permanent establishments (PEs).

The tribunals December 24 ruling concerned Tokyo-based Mitsui and Company, which has investments in various sectors in India, including machinery, chemicals, energy, lifestyle, iron and steel, information technology and food products.

The Income Tax Department had attributed 50 per cent of the income Mitsui earned from its Indian operations to the liaison office, which it termed a PE, for assessment year 2002-03. Tax officials said that if a company had a PE in India, the income would be taxed as business income. If a foreign company operating in India is taxed on its business income and the country does not have a specific double taxation avoidance treaty with India, the tax rate on income and gains is 55 per cent.

However, the department is in the process of filing a petition challenging the order in the high court since the ruling has revenue implications running into hundreds of crores. This is because almost all international tax cases hinge on whether or not the company has a PE in India.

The Organisation for Economic Co-operation and Development tax guidelines say a foreign firm is deemed to have a PE in a country if it employs an agent, other than an independent agent, to regularly act for it and conclude contracts on its behalf.

Although the order did not clearly specify the reason clearly, tax experts said the liaison office might not be termed as PE if it did not employ any agent to carry out the business or conclude contracts on its behalf. If a companys income is not taxed as business income, it is taxed as royalty or technical fees.

On PEs, the Supreme Court had in July 2007 ruled out any tax liability in India of US-based investment bank Morgan Stanley on income from its India-based outsourcing outfit, Morgan Stanley Advantage Services (MSAS). The Supreme Court quashed the Income Tax Departments contention that MSAS was not a PE.

Tax department officials do not agree with the tribunals ruling. When the economy was opened up in 1991, many foreign companies opened liaison offices to explore investment and other opportunities. In 1995, the ITAT had given a ruling that a liaison office was not a PE. However, these liaison offices are no longer mere offices as major investments are being made through these offices, said an official.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Portfolio

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions