« Top Headlines » Open DEMAT Account in 24 hrs  Creating Vouchers Directly from Bank Statements in Tally Prime A Complete Step-by-Step Guide  Payroll Management in Tally Prime 7.0 Expected Enhancements, Current Features, and Future Scope  How to Change Current Period in Tally Prime Step-by-Step Guide for Users  Global Payroll Management with Tally Prime: How International Businesses Use It Beyond India  How to Manage B2B HSN Codes in Tally Prime: A Complete Guide for Businesses  How to Check Business Revenue in Tally Prime: A Complete Step-by-Step Guide  MSME Payment Rule in Tally Prime: Understanding the Law and Its Impact on Businesses in 2025 The MSME (Micro, Small and Medium Enterprises) Payment Rule is a legal framework introduced under th  Multipurpose Empanelment Form (MEF) 2025 26 Meaning, Purpose, and How to Manage It in Tally Prime  GST Appellate Tribunal (GSTAT) Structure, Powers, and Its Relevance in Tally Prime Implementation  How Tally Prime Supports the Real Estate & Construction Industry in India  Comparison Between Tally Prime 6.1 and Tally Prime 6.2 «  Exempt micro-insurance from service tax: UN... I-T dept hot on trail of tax dodgers... » Designing and fabrication abroad not taxable: SC June, 07th 2007 The Supreme Court has held that profits from designing and fabrication of an Indian project done outside the country is not taxable.   Partly allowing the appeal of the Commissioner of Income Tax in the case of M/s Hyundai Heavy Industries Co Ltd (HHI), the court ruled that the assessing authorities were right in attributing the profits to the Indian permanent establishment (PE) at 10 per cent of the gross receipts in respect of its activities of installation, commissioning etc performed in India. That would be taxable.   HHI is a non-resident foreign company incorporated in South Korea. It had entered into an agreement with ONGC for designing, fabrication, hook-up and commissioning of a unit in Bombay High.   The revenue authorities did not accept its return as nil income. It argued that it did not have a PE in India and therefore it was not assessable to tax in India. It further contended that it was entitled to exemption under Article 7 of the Convention for Avoidance of Double Taxation. The further argument of the company was that the contract in question was divisible into two types of operations -- one being fabrication in Korea and the other consisting of installation in India. Therefore any income arising from the activity of fabrication in Korea was not assessable in India.   The Supreme Court accepted the latter view.   The judgment explained that the Income-Tax Act concerned only with profits earned in India and therefore, a method has to be found out to ascertain the profits arising in India.   The only way to do so is by treating the Indian PE as a separate profit centre vis-a-vis the foreign enterprise (Korean, in this case). This demarcation is necessary in order to earmark the jurisdiction over the operations of a company.   Unless the PE is treated as a separate profit centre, it is not possible to ascertain the profits of the PE which, in turn, constitutes profits arising to the foreign company in India.   The computation of profits in each PE decides the quantum of income on which the source country can levy the tax. Therefore, the profits of the PE must be computed as independent units, the Supreme Court said.