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: empanelment :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: form 3cd :: VAT RATES :: articles on VAT and GST in India :: cpt :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4%
 
 
« News Headlines »
 All about income tax return form Sahaj
 Why seeing Form 26AS is a must before filing tax return and how to access it
 No tax on notice period pay cut
 Interpretation Of Central Goods And Services Tax (Cgst) Act (Part-1)
 What to do if you haven’t filed your taxes
 Income Tax Declaration To Employer: 10 Changes You Should Be Aware Of
 What your income tax says about you
 Self e-filing of income tax returns
 Why do we get 3 extra days to file income tax returns in 2017?
 Income Tax department launches 'Operation Clean Money'-II
 Here’s how to e-file your income tax return

Agent route won't help foreign cos avoid taxes here
April, 24th 2007

In a crucial tax ruling which will make the government richer by a few thousand crores, the Mumbai Income Tax Appellate Tribunal has held that revenue generated in India by a foreign company is taxable in India, even if the firm operates through a local agent. The order was given in a case pertaining to Sony Entertainment Televisions Singapore-based parent company, SET Satellite (Singapore ) Pte Ltd.

The order will effectively put an end to the practice by foreign firms of avoiding tax in India by setting up a company in another country with which India has a tax avoidance treaty; in such a structure, the earnings are shown in the name of the offshore company.

The order, upholding the income tax demand of Rs 10 crore, was given by ITAT last week on an appeal filed by the income tax department in the case of SET Satellite (Singapore). The company had said that tax cannot be levied on the income generated in India through selling airtime and advertisement revenue because the purchase and sale of airtime is effected in Singapore and also an arms length price was paid to the companys Indian agent, SET India. It said that the money paid to SET India is the only income that can be taxed in India.

The ITAT bench, comprising Pramod Kumar and Madhavi Devi, rejected the contention. It said that the payment made to the companys agent in India (ie, SET India), can at best be described as the expenditure incurred by the foreign company and this amount may be deducted for the purpose of arriving at the taxable income. But the tax should be levied on the foreign company on its whole operation in India.

The payment of arms length remuneration to the agent by a foreign company is its expenditure, and the taxability of such an expenditure in the hands of the recipient cannot extinguish the taxability of foreign company paying it.

In coming to this conclusion, the ITAT disagreed with the AAR ruling in the case of Morgan Stanley, which was in favour of the taxpayer. This had sparked the entire controversy.The ITAT has held that irrespective of whether one carries on the business directly or through the dependent agent, the profit attributable to such business continue to be taxable in the source country.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Reengineering Software Re-engineering Software Reverse Engineering Software Reverse Development Software Change Modulation Software Conversion Software Re-creation Software Re-development

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