Latest Expert Exchange Queries
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) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: articles on VAT and GST in India :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: empanelment :: ACCOUNTING STANDARDS :: VAT Audit :: VAT RATES :: form 3cd
 
 
From the Courts »
 The Principal Commissioner Of Income Tax-4 Vs. Inter Globe Technology Quotient Pvt. Ltd.
 Akum Drugs And Pharmaceuticals Limited Through: Director Shri. Sanjeev Jain Vs. Income Tax Officer, Ward-2(1) & Anr.
 Pr. Commissioner Of Income Tax Central-2 New Delhi Vs. Meeta Gutgutia Prop. M/s Ferns „n? Petals
 Prabhatam Investment Pvt. Ltd vs. ACIT (ITAT Delhi)
 CIT vs. Laxman Industrial Resources Pvt.Ltd (Delhi High Court)
  State Of Jharkhand vs. Lalu Prasad Yadav (Supreme Court)
 CIT vs. Krishan K. Aggarwal (Supreme Court)
 Ambuja Cements Ltd. Vs. Commissioner, Service Tax Commissionerate, Delhi
 Director Of Income Tax (Exemptions) Vs. Vishwa Hindu Parishad
 ITAT Proposes Important Changes To Tribunal Rules
 Meherjee Cassinath Holdings Pvt. Ltd vs. ACIT (ITAT Mumbai)

IJM (India) Infrastructure Ltd vs. ACIT (ITAT Hyderabad)
February, 26th 2014

Transfer Pricing provisions do not apply if the AE is assessed in India & there is no chance of shifting of profits outside India or erosion of tax base

The transaction between the assessee (an Indian company) and IJM-IJMII JV and IJM Corporation, Berhard, Malaysia and IJM-NBCC-VRM (JV) between National Building Construction Co. Ltd., VRM and the assessee does not fall u/s 92B(2) for the following reasons:

(i) The AE, IJM Corporation Berhad, has a Project Office at Delhi which constitutes a PE. The AE has established a place of business in India u/s 592 of the Companies Act, 1956. As the principal company had executed a Power of Attorney in favour of the Indian resident Director to manage the branch operations in India, it was established beyond any doubt that the entire control and management in relation to operations in India is situated in India. Consequently, the PE has to be assessed as a “resident” u/s 6(3)(ii);

(ii) Moreover, under the provisions of the DTAA with Malaysia, a PE is treated as a separate legal entity, independent of its foreign principal enterprise. Further, Article 24 of the DTAA contains a non-discrimination provision. It prohibits a Contracting State from making any discrimination in the matter of taxation between its own national and a national of the other Contracting State, who are placed in similar circumstances. In other words, a Contracting State is obliged to provide the same tax treatment to a national of the other Contracting State as it would give to its own nationals. Article 3(h) of the DTAA defines the term “national” to include both-natural persons and artificial persons, such as companies, etc. Therefore, a PE should be treated as resident in India inasmuch as the business profits attributable to PE are taxable in India and all business decisions relating to the PE are entered and concluded in India. Treating PE as a non-resident amounts to violation of Article 24 of DTAA with Malaysia;

(iii) IJM-IJMII JV (Joint Venture between the assessee and IJM Corporation Berhad, Malaysia and IJM-NBCC-VRM (Joint Venture between National Building Construction Co. Ltd., VRM and the assessee) are also residents. These JVs are formed in India by an agreement between the respective parties and assessed in the status of AOP. U/s 6(2) an AOP is “resident” in India in every case except where during that year the control and management of its affairs is situated wholly outside India. Also, Article 4 of the DTAA provides that a person which includes AOPs shall be deemed to be residents of the State in which its place of effective management is situated. The JV agreements provide that all decisions relating to the JV are taken in India. The Revenue has not brought any evidence on record suggesting that these AOPs are controlled from Malaysia. Whereas the assessee led the conclusive evidence on record to show that the AOPs are residents in India;
[ad}
(iv) The object behind enactment of transfer pricing regulations is to prevent shifting of profits outside India as is brought out by Morgan Stanley 292 ITR 416 (SC) & Circular No. 14 to the Finance Act 2001. In the present case, there is no possibility of shifting of profits outside India or erosion of country’s tax base because the PE profits of the AE are assessable to tax in India. Therefore, the transactions with the AEs are outside the purview of the transfer pricing regulations.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multi-level Marketing MLM India Affiliate Marketing Affiliate Marketing Software MLM Software MLM Solutions Multi level marketing solutions MLM Servi

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