Key Takeaways:
- Background of the Case
- Contentions of the Department and Assessee
- Principles and Precedents Governing the Rule of PE
- Supreme Court's Verdict
Commissioner of income tax-iv.reliance energy ltd.[2021] 127 taxmann.com 69(sc)DVSResearchFoundatio
Key Takeaways:
- Background and Overview of Legal Provision
-Facts of the Case
- Contentions of the Assessee and Revenue
- Supreme Court’s Verdict
- Key Learnings and Way Forward
FALLACIOUS DISREGARDING OF TRANSACTIONS THAT RESULT IN A TAX BENEFIT TO THE A...DVSResearchFoundatio
Key Takeaways:
- Facts of the case
- AO's contention
- Ruling of CIT(A) and issues for consideration of the ITAT
- Observations of ITAT
- Final Ruling
- Way Forward
Key Takeaways:
- Facts of the case
- Issues and Orders of the case
- Contention of the parties
- Observations by Honourable Supreme Court
- Conclusions
Validity of Notice Issued for Income Escaping Assessment - Analysis of SC RulingDVSResearchFoundatio
Key Takeaways:
- Facts of the Case
- Issues Raised by the Department
- Contentions of the Revenue and Assessee
- Analysis and Ruling given by the Supreme Court
Commissioner of income tax-iv.reliance energy ltd.[2021] 127 taxmann.com 69(sc)DVSResearchFoundatio
Key Takeaways:
- Background and Overview of Legal Provision
-Facts of the Case
- Contentions of the Assessee and Revenue
- Supreme Court’s Verdict
- Key Learnings and Way Forward
FALLACIOUS DISREGARDING OF TRANSACTIONS THAT RESULT IN A TAX BENEFIT TO THE A...DVSResearchFoundatio
Key Takeaways:
- Facts of the case
- AO's contention
- Ruling of CIT(A) and issues for consideration of the ITAT
- Observations of ITAT
- Final Ruling
- Way Forward
Key Takeaways:
- Facts of the case
- Issues and Orders of the case
- Contention of the parties
- Observations by Honourable Supreme Court
- Conclusions
Validity of Notice Issued for Income Escaping Assessment - Analysis of SC RulingDVSResearchFoundatio
Key Takeaways:
- Facts of the Case
- Issues Raised by the Department
- Contentions of the Revenue and Assessee
- Analysis and Ruling given by the Supreme Court
Income Computation and Disclosure Standards (ICDS) – VI to XDVSResearchFoundatio
Objectives & Agenda :
To understand the concept of ICDS and the rationale for introducing ICDS, its applicability and its commencement year. To analyse ICDS VI-X and draw up a comparative analysis of ICDS and Accounting Standards (AS). Finally, to know the relevant disclosure of ICDS in tax audit report.
Key Takeaways:
- Provisions dealing with set-off and carry forward
- Inter-head and Inter-Source Set-off of Losses
- Carry Forward and Set-off of Losses in Special Cases
Key Takeaways:
South Africa in Numbers
How to Register Business in South Africa
Time and Cost involved in Registrations
Regulations and Reforms
Key Statistics
Objectives & Agenda :
To understand the concept of ICDS and the rationale for introducing ICDS, its applicability and its commencement year. To analyse each and every ICDS and draw up a comparative analysis of ICDS and Accounting Standards (AS). Finally, to know the relevant disclosure of ICDS in tax audit report.
Key Takeaways:
- Background and Overview of Legal Provision
- Facts of the Case
- Contentions of the Assessee and Revenue
- Supreme Court’s Verdict
- Key Learnings and Way Forward
Key Takeaways:
- Overview and Business Environment
- Setting up of Business and Obtaining Permits
- Tax Profile and Concessions
- Impact of Covid and Reforms
- Key Statistics including FDI and ODI
Key Takeaways:
- Demography and Business Environment of Kenya
- Procedures relating to Setting up Business
- Regulations and Reforms
- Business Structures and Investment Incentives
- Relevant Numbers
Dear Patron
Here we are with the Thirty second successive issue of our monthly ‘Missive’.
We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents.
Thanks and regards,
Knowledge Management Team
What are the important measures taken by SEBI in response to COVID-19?DVSResearchFoundatio
Key Takeaways:
Relaxations from disclosure requirements
Relaxations for fundraising
Relaxations from compliance norms
Relaxations from regulatory compliances and other measures
The presentation shall dwell upon the importance of Double taxation avoidance agreement and purpose of certificate of residence(COR).
The event would also throw light on what is COR, benefits of COR, eligibility of obtaining of COR, requisite documents and procedures for obtaining the same. Lastly, webinar would emphazise the importance of limitation of benefit clause in DTAA
OBJECTIVE
In the present era of cross-border transactions across the globe, the effect of taxation is one of the important considerations for any trade and investment decisions in other countries. Where a taxpayer is resident in one country but has a source of income situated in another country it gives rise to possible double taxation, to address the same Double Taxation Avoidance Agreements (DTAAs) are entered between countries. In this webinar, we shall understand and analyse the DTAA entered by India-UAE.
An Insight on Supreme Court's Ruling relating to Permanent Establishment in S...DVSResearchFoundatio
Key Takeaways:
- Overview of the Income Tax provisions
- Assessee's and Revenue's Contention
- Findings of Tribunal
- Ruling of High Court
- Pronouncement by the Supreme Court
TransPrice Times 15 December 2015 - 12 January 2016Sangesh Sase
Dear Readers,
Please find a link to the first edition of TransPrice Times for the new year 2016.
With the onset of holiday season, we saw some important judgement being pronounced by courts which are summarized in the alert.
Further, a long awaited guidance from the CBDT on the change in the residential status law which included the a global concept of 'Place of Effective Management' ('POEM') is also covered in the alert.
We hope you find this newsletter useful and look forward to your feedback and suggestions. You can write to us at akshaykenkre@transprice.in
Happy Reading!!!
Income Computation and Disclosure Standards (ICDS) – VI to XDVSResearchFoundatio
Objectives & Agenda :
To understand the concept of ICDS and the rationale for introducing ICDS, its applicability and its commencement year. To analyse ICDS VI-X and draw up a comparative analysis of ICDS and Accounting Standards (AS). Finally, to know the relevant disclosure of ICDS in tax audit report.
Key Takeaways:
- Provisions dealing with set-off and carry forward
- Inter-head and Inter-Source Set-off of Losses
- Carry Forward and Set-off of Losses in Special Cases
Key Takeaways:
South Africa in Numbers
How to Register Business in South Africa
Time and Cost involved in Registrations
Regulations and Reforms
Key Statistics
Objectives & Agenda :
To understand the concept of ICDS and the rationale for introducing ICDS, its applicability and its commencement year. To analyse each and every ICDS and draw up a comparative analysis of ICDS and Accounting Standards (AS). Finally, to know the relevant disclosure of ICDS in tax audit report.
Key Takeaways:
- Background and Overview of Legal Provision
- Facts of the Case
- Contentions of the Assessee and Revenue
- Supreme Court’s Verdict
- Key Learnings and Way Forward
Key Takeaways:
- Overview and Business Environment
- Setting up of Business and Obtaining Permits
- Tax Profile and Concessions
- Impact of Covid and Reforms
- Key Statistics including FDI and ODI
Key Takeaways:
- Demography and Business Environment of Kenya
- Procedures relating to Setting up Business
- Regulations and Reforms
- Business Structures and Investment Incentives
- Relevant Numbers
Dear Patron
Here we are with the Thirty second successive issue of our monthly ‘Missive’.
We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents.
Thanks and regards,
Knowledge Management Team
What are the important measures taken by SEBI in response to COVID-19?DVSResearchFoundatio
Key Takeaways:
Relaxations from disclosure requirements
Relaxations for fundraising
Relaxations from compliance norms
Relaxations from regulatory compliances and other measures
The presentation shall dwell upon the importance of Double taxation avoidance agreement and purpose of certificate of residence(COR).
The event would also throw light on what is COR, benefits of COR, eligibility of obtaining of COR, requisite documents and procedures for obtaining the same. Lastly, webinar would emphazise the importance of limitation of benefit clause in DTAA
OBJECTIVE
In the present era of cross-border transactions across the globe, the effect of taxation is one of the important considerations for any trade and investment decisions in other countries. Where a taxpayer is resident in one country but has a source of income situated in another country it gives rise to possible double taxation, to address the same Double Taxation Avoidance Agreements (DTAAs) are entered between countries. In this webinar, we shall understand and analyse the DTAA entered by India-UAE.
An Insight on Supreme Court's Ruling relating to Permanent Establishment in S...DVSResearchFoundatio
Key Takeaways:
- Overview of the Income Tax provisions
- Assessee's and Revenue's Contention
- Findings of Tribunal
- Ruling of High Court
- Pronouncement by the Supreme Court
TransPrice Times 15 December 2015 - 12 January 2016Sangesh Sase
Dear Readers,
Please find a link to the first edition of TransPrice Times for the new year 2016.
With the onset of holiday season, we saw some important judgement being pronounced by courts which are summarized in the alert.
Further, a long awaited guidance from the CBDT on the change in the residential status law which included the a global concept of 'Place of Effective Management' ('POEM') is also covered in the alert.
We hope you find this newsletter useful and look forward to your feedback and suggestions. You can write to us at akshaykenkre@transprice.in
Happy Reading!!!
TransPrice Times 15 December 2015 - 12 January 2016Akshay KENKRE
Dear Readers,
Please find a link to the first edition of TransPrice Times for the new year 2016.
With the onset of holiday season, we saw some important judgement being pronounced by courts which are summarized in the alert.
Further, a long awaited guidance from the CBDT on the change in the residential status law which included the a global concept of 'Place of Effective Management' ('POEM') is also covered in the alert.
We hope you find this newsletter useful and look forward to your feedback and suggestions. You can write to us at akshaykenkre@transprice.in
Happy Reading!!!
Read about the tax litigation in India - direct tax litigation & corporate tax litigation in India, the future of indirect tax litigation & managing indirect tax litigation.
Objectives & Agenda :
Transfer Pricing is one of the most litigious areas in Taxation. In this Webinar we shall look at some of the recent Judicial Precedents in Transfer Pricing Law with the aim of understanding the issues which arise and the views taken by the Authorities and the Court of Law. The Webinar discusses the facts of the case, issues and the Principles held by the Courts in each of these Decisions.
Permanent Establishment & Business Connection and it's Impact on Taxability o...DVSResearchFoundatio
Key Takeaways
Understanding Permanent Establishment and Business Connection
Attribution of Profits
Interplay of Permanent Establishment and Business Connection
Illustrations and Judicial Precedents
Building bridges - A newsletter from Grant Thornton’s Indo-Japan Desk - Volume 1Misbah Hussain
The newsletter aims to elucidate the key milestones in the ever evolving relationship of India and Japan, and provide insights to dynamic businesses in India and Japan on key developments.
Dear Patron,
Here we are with the Thirty forth successive issue of our monthly ‘Missive’.
We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents.
Thanks and regards,
Knowledge Management Team
The twenty fourth issue of our monthly tax newsletter – Tax Inform, is out. Through these newsletters, we provide a compilation of key tax-related case laws, circulars, notifications, etc. issued by the authorities in the previous month, impacting entities and individuals operating in India.
The snippet covers judgements on inter corporate loans, issue of shares and indirect transfers.
The 3 topics have been most debated over past few years and it becomes imperative to keep a track of most recent rulings on the same.
TransPrice presents to you TransPrice Times for December 2014 & January 2015.
The subject of transfer pricing is ever evolving. This newsletter endeavors to keep you updated with recent happenings in the transfer pricing regime. We aim to provide information on the latest case laws pronounced. Trust you will find it useful.
Happy reading !!!
Permanent Establishment (PE) is a crucial concept in international taxation, determining when a foreign company becomes liable to pay taxes in a host country.This article provides an overview of Permanent Establishment in India, including its definition, its types, and the impact of setting up PE in India.
Similar to Project Office For Communication Purposes: Will It Constitute A PE? (20)
SCRAPPING OF RETRO TAX PROVISIONS : A REVIVAL OF OVERSEAS INTEREST IN INDIADVSResearchFoundatio
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- Scrapping of Restrospective effect of Taxation
- Indirect transfer of assets not taxable before 28th May 2012
- Vodafone case analysis
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Key Takeaways: - Analysis of section 45(4), section 9B of the Income Tax Act...DVSResearchFoundatio
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- Facts and issues of the case
- Rationale behind the section
- Ruling of lower jurisdiction authorities
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AUTOMATIC VACATION OF STAY GRANTED BY TRIBUNALDCIT v. PEPSI FOODS LTD. [2021]...DVSResearchFoundatio
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- Facts of the Case
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Automatic Vacation of Stay Granted by Tribunal: Analysis of SC Ruling DCIT vs...DVSResearchFoundatio
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[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
As a business owner in Delaware, staying on top of your tax obligations is paramount, especially with the annual deadline for Delaware Franchise Tax looming on March 1. One such obligation is the annual Delaware Franchise Tax, which serves as a crucial requirement for maintaining your company’s legal standing within the state. While the prospect of handling tax matters may seem daunting, rest assured that the process can be straightforward with the right guidance. In this comprehensive guide, we’ll walk you through the steps of filing your Delaware Franchise Tax and provide insights to help you navigate the process effectively.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
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India Orthopedic Devices Market: Unlocking Growth Secrets, Trends and Develop...Kumar Satyam
According to TechSci Research report, “India Orthopedic Devices Market -Industry Size, Share, Trends, Competition Forecast & Opportunities, 2030”, the India Orthopedic Devices Market stood at USD 1,280.54 Million in 2024 and is anticipated to grow with a CAGR of 7.84% in the forecast period, 2026-2030F. The India Orthopedic Devices Market is being driven by several factors. The most prominent ones include an increase in the elderly population, who are more prone to orthopedic conditions such as osteoporosis and arthritis. Moreover, the rise in sports injuries and road accidents are also contributing to the demand for orthopedic devices. Advances in technology and the introduction of innovative implants and prosthetics have further propelled the market growth. Additionally, government initiatives aimed at improving healthcare infrastructure and the increasing prevalence of lifestyle diseases have led to an upward trend in orthopedic surgeries, thereby fueling the market demand for these devices.
Remote sensing and monitoring are changing the mining industry for the better. These are providing innovative solutions to long-standing challenges. Those related to exploration, extraction, and overall environmental management by mining technology companies Odisha. These technologies make use of satellite imaging, aerial photography and sensors to collect data that might be inaccessible or from hazardous locations. With the use of this technology, mining operations are becoming increasingly efficient. Let us gain more insight into the key aspects associated with remote sensing and monitoring when it comes to mining.
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The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Project Office For Communication Purposes: Will It Constitute A PE?
1. PROJECT OFFICE FOR COMMUNICATION
PURPOSES: WILL IT CONSTITUTE A PE ?
DIT v. SAMSUNG HEAVY INDUSTRIES CO. LTD.
[2020] 117 taxmann.com 870 (SC)
CA Jugal Gala
3. LEGENDS USED
AO Assessment Order
AY Assessment Year
DTAA Double Taxation Avoidance Agreement
ITAT Income Tax Appellate Tribunal
PO Project Office
ONGC Oil and Natural Gas Corporation
SC Supreme Court
HC High Court
Hon’ble Honourable
4. PRESENTATION SCHEMA
Background and Facts of the
Case
History of the Case Issues and Contentions
Principles and Precedents
Governing the Rule of PE
SC’s Verdict Conclusion and Key Learnings
6. BACKGROUND
The concept of Permanent Establishment (PE) is used in DTAAs to
establish a country’s tax jurisdiction over a foreign company’s business
activities.
PE is a fixed place of business through which the business of an enterprise
is wholly or partly carried on.
Generally, a foreigner is not required to pay income tax on its business
profits unless it has a PE in the source country and the profits are
attributable to such PE.
7. FACTS OF THE CASE
Project Office for
communication
Assessee company
Installation and
commissioning
- In 2006, ONGC awarded a turnkey contract to a Samsung
Heavy Industries Co. Ltd. (Assessee – a South Korean
company), engaged in business of heavy engineering
- Assessee carried out co-ordination and communication
activities in India, design and engineering activities in
Malaysia, fabrication enquiry in Korea and Malaysia.
- On arrival of goods from Malaysia to India, installation
and commissioning activities are carried out in India at
Mumbai offshore.
- ONGC asked the assessee to open a project office in
Mumbai for the purpose of coordination and
communication between the parties to the contract
- On an admitted position that assessee had an
installation PE in India, assessee consistently offered tax
on “from inside India” activities like installation and
commissioning of the platform
- Accordingly, in the relevant year, assessee filed its return
of income showing loss in respect of installation PE.
Contd. in next slide
8. THE ISSUE
AO assessed the total income holding that “Project Office” is a fixed PE in India as it has a role to play in
design, fabrication, etc. of the platforms which was carried outside India
Accordingly, he held that incomes earned by assessee outside India are attributable to the PE in India by
way of project office for the contract.
The dispute revolves around the following:
• Whether the consideration received by the assessee, a foreign company, against “offshore supplies”
made by it from outside India is taxable in India, and if so, how much of the income can be attributed to
the PE from such business of supplies?
10. BEFORE THE ASSESSING OFFICER
On audit of the Assessee’s filed returns, the AO held that
• The Project was a single indivisible “turnkey” project, whereby ONGC was to take over the
project completed only in India.
• Resultantly, the profits arising from the successful commissioning of the Project would also
arise only in India.
• The work relating to fabrication and procurement of material was part of the contract for
execution of work assigned by ONGC.
• The work was wholly executed by the permanent establishment (PE) of the Assessee in India.
• The AO attributed 25% of the revenue earned outside India, as the income of the Assessee,
which was taxable in India.
AO’s Draft Order
On appeal by the Assessee, the Dispute Resolution Panel (DRP) upheld the AO’s draft order and the
AO passed the final order pursuant to the directions received from the DRP.
11. BEFORE THE ITAT
• The ITAT referred to the Board resolution of the Assessee for setting up the Project Office in
Mumbai pursuant to ONGC’s request.
• The Board resolution indicated that the PO was set-up for co-ordination and execution of the
Project (the exact words of the Board Resolution will be discussed later in SC ruling)
• The ITAT held that this constituted a PE of the Assessee as it was integral to the performance
of the contract between it and ONGC.
• Accordingly, the ITAT confirmed the decision of the AO and the DRP.
• However, the ITAT remanded to the AO, the matter of the attribution of 25% of revenue earned
outside India as income of the Assessee, for fresh examination .
ITAT’s Ruling
Aggrieved by the ITAT’s order, the taxpayer filed an appeal before the Uttarakhand High Court (HC).
Aggrieved by the AO’s final order upon directions of the DRP, the taxpayer filed an appeal with the ITAT
12. BEFORE THE UTTARAKHAND HIGH COURT
• According to the DTAA, if an enterprise does not have a tax identity in India in the form of a
permanent establishment, it has no obligation to either submit any tax return with, or pay
any tax to India.
• Neither the AO nor the ITAT had recorded any evidence to justify that the Project Office of the
taxpayer is a PE in India.
• Held: The tax liability could not be fastened on the Assessee without establishing that the
same is attributable to the PE of the Assessee in India.
HC’s Ruling
Aggrieved by the HC’s ruling, the Revenue filed an appeal before the Supreme Court of India.
The issue which lies with the Hon’ble SC is that whether Assessee’s PO can be construed as PE in India.
14. ASSESSEE’S CONTENTIONS
Mumbai PO was to merely act as a communication channel between Samsung and ONGC in respect of the
Project. Hence, the activities were preparatory & auxiliary in nature.
The Pre-engineering, survey, engineering, procurement and fabrication activities took place abroad in the
year 2006
The PO consisted of only two employees, neither of whom had any technical qualification whatsoever.
The accounts that were produced would show that the PO had not incurred any expenditure on execution
of the project
The burden of establishing that a foreign Assessee has a PE in India is on the tax authorities, and this
burden had not been discharged on the facts of the present case
•Without admitting that there is a PE in India through which the core business activity of the
Assessee was carried out, no taxable income can be attributed to it.
•This is because audited accounts that were produced showed that the project did not yield
any profit, but in fact resulted in only losses.
15. REVENUE’S CONTENTIONS
The project was a single indivisible “turnkey” project (which could not be split up), whereby ONGC was to
take over a project that is completed only in India.
Resultantly, profits arising from the successful commissioning of the Project would also arise only in India
The Assessee had not contested the existence of the PO in India but it had only contested that the project
was used merely for preparatory and auxiliary activities.
However, PO has a sense of permanence attributed to it. If it was only for the purpose of preparatory and
auxiliary activities, they could have established a liaison office.
Therefore, the PO must be construed as PE, thus attracting tax liability on the Assessee’s income.
17. OVERVIEW OF INDIA-KOREA DTAA
•Purpose of advertising,
•The supply of information,
•For the purpose of scientific research
•For the purpose of any other activity, if it has a preparatory or auxiliary character.
Permanent Establishment means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
PE excludes fixed place of business solely for the following purposes:
Article 5(1)
Article 5(4)(e)
18. CIT v. HYUNDAI HEAVY INDUSTRIES CO. LTD.
– [2007] 7 SCC 422
Profits earned by the Korean company on supplies of fabricated platforms cannot be made attributable to its
Indian PE as the installation PE came into existence only on conclusion of the transaction giving rise to the
supplies of the fabricated platforms.
The installation PE emerged only after the contract with ONGC stood concluded.
It emerged only after the fabricated platform was delivered in Korea to the agents of ONGC.
Therefore, the profits on such supplies of fabricated platforms cannot be said to be attributable to the PE.
The facts in this case dealt with a turnkey contract entered into between Hyundai Heavy Industries Co. Ltd. (a
Korean company) and ONGC wherein, there was a separate agreement as to design, manufacture, erection
etc. culminating in another separate agreement relating to installation and commissioning of the platform
The Court held that:
19. DIT v. MORGAN STANLEY & CO. [2007] 7 SCC 1
One of the group companies of Morgan Stanley Group, Morgan Stanley Advantages Services (MSAS), an
Indian Company, entered into an agreement for providing certain support services to Morgan Stanley and
Company, a US Company
MSAS was set up to support the main office by providing IT enabled services such as back office
operations, data processing and support centre to Morgan Stanley and Company
According to the DTAA between US and India, the maintenance of a fixed place of business solely for
advertisement, scientific research or for activities which are preparatory or auxiliary in character is not a
PE – back office operations performed by MSAS were construed to be preparatory / auxiliary in nature
Activities performed by stewards who were deployed by the US Company to work in India as employees
of the Indian company were so employed merely to protect the American companies’ interests – hence
service PE did not exist
20. ADIT v. E- FUNDS IT SOLUTION INC. [2018] 13 SCC 294
In this case, it was held that the burden of proving the fact that a foreign Assessee has a PE in India and
must therefore suffer tax from the business generated from such PE, is on the Revenue.
21. ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD v. DIT
[2007] 3 SCC 481
The Court discussed the principle of PE
• The distinction between the existence of a business connection and the income accruing
or arising out of such business connection is clear and explicit.
• PE’s non-involvement in the transaction excludes it from being a part of the cause of
the income itself, and thus there is no business connection.
• For attracting the taxing statute there has to be some activities through PE. If income
arises without any activity of PE then even under DTAA the taxation liability in respect of
overseas services would not arise in India.
23. DISCUSSION
The condition precedent for applicability of Article 5(1) of the DTAA and the ascertainment of a “PE” is that it
should be an establishment “through which the business of an enterprise” is wholly or partly carried out
Profits of a foreign enterprise are taxable in a country only where the said enterprise carries on its core
business through a Permanent Establishment in that country.
Maintenance of a fixed place of business which is of a preparatory or auxiliary character in the trade or
business of the enterprise would not be considered to be a PE under Article 5 of the India-Korea DTAA
Based on the principles and precedents, the Court observed that:
24. APPLICATION TO FACTS
• Held that the ITAT order was perverse based on selective reading of documents submitted by
the taxpayer foreign company.
• Referring to the Assessee’s Board Resolution accompanying the application to RBI for opening
of the PO, the Court noted that the PO was established to coordinate and execute “delivery
documents in connection with construction of offshore platform modification of existing
facilities for ONGC”
• The SC also noted that only two people were working in the PO, neither of whom were
qualified to perform any core activity for the assessee and opined that ITAT should not have
ignored the finding
25. FINAL RULING
The Assessee’s PO was solely an auxiliary office for liaisoning between the taxpayer and ONGC, and was
not involved in the core activity of execution of the project itself.
The Revenue has failed to do away with its burden of proving that the PO at Mumbai is a permanent
establishment.
Therefore, no fixed place PE was established because the Assessee’s PO activities would fall within Article
5(4)(e) of DTAA between India and Korea i.e., preparatory and auxiliary activities.
- Fixed place PE is constituted only when core business activities are carried out in India
- Having held that, the other questions with regard to assumptive attribution was kept
aside
Therefore, the Court confirmed the Uttarakhand HC’s judgment in favour of the Assessee and held that :
27. KEY LEARNINGS
The principle related to carrying on of ‘Core Business Activity’ is of prime Importance for establishing Fixed Place
PE.
There have been companies avoiding tax by claiming that they carry out preparatory and auxiliary activities, while
actually carrying out core business activities through their Liaison/ project/ branch offices.
The Hon’ble Supreme Court in this case has granted a genuine benefit under the DTAA to the Assessee after
taking note of the fact that the activities of the PO were actually in the nature of preparatory and auxiliary and
had no part to play in the core business function of offshore supplies
The Appeal by the Revenue against the decision of the Hon’ble High Court was dismissed.