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Declaration of Profit of foreign subsidiary in Indian holding Company

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This query is : Resolved

PRABHAKAR (Querist)
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29 November 2024 Dear Members

Our client ABC Pvt Ltd (Indian Parent Company), have 1 Wholly Owned Subsidiary company (100% share holding) in foreign country. The income of that Subsidiary is fully exempt in that country and hence no tax has been paid by the subsidiary company.
I need ur opinion on "Whether we have to declare profit of that subsidiary company in ITR-6 of Indian parent company as global income to be taxed in the hands of Indian Company ? or can we show this profit as exempt income in ITR-6 ?"

thank you in advance

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 November 2024 Section 9(1)(i) of the Income-tax Act, 1961 (ITA), states that income accruing or arising outside India shall be deemed to accrue or arise in India if it is derived from a business controlled in India or a profession set up in India.
As the Indian parent company has control over the foreign subsidiary, the subsidiary's income is deemed to accrue or arise in India under Section 9(1)(i) of the ITA.
Therefore, the Indian parent company must report the subsidiary's profit as part of its global income in the ITR-6.

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