07 October 2009
X Ltd (a USA Co.) sells software/related products to an Indian Co., for which the payment is to be made by the Indian Co.
X Ltd has a Subsidiary Co. in India, there is no income attributable to such PE nor it is involved in this transaction.
Now my query is, whether having such a Subsidiary Co. constitute a PE in India under USA-India DTAA. If yes what will be the TDS % to be with held by the Indian Co. while making payment.
07 October 2009
hello mr.arihanth as per the provision of incometax act , it has been mentioned in the definition of permanent establishment that if one enterprises hold more than 26% share capital of another enterprises , it shall be consisered as "PE" and accordingly provision of transfer pricing is applicable. hence relation ship exist between the foriegn co. & its subisidiary but not between foriegn co.& indian company and its subisy & indian comapny. therefore it this transaction transfer pricing is not attracted.
15 October 2009
Thanks for the reply but I think I was not clear in my query last time. Kindly help me.....
Query: X Ltd (a USA Co.) sells software/related products to an Indian Co., for which the payment is to be made by the Indian Co.
X Ltd has also a Subsidiary Co. in India, there is no income attributable to such Subsidiary (PE)
What will be the TDS % to be with held by the Indian Co. while making payment. - I. If income is attributable but cannot be easily determined. - II. If income is not attributable.
Does section 164 -Maximum Marginal rate comes here ?
CAclubindia
