liaison office

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Veeresh (Querist)
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19 March 2009 Dear Friends,

Kndly provide your valuable opinion of the following issue.

1. A foreign company had established a liason office in India.
2. The liason office provides technical consultancy services to the clients of foreign company who are staying at abroad.
3. The liason office do not sell any of thier services/goods in India.
4. All the funds for the maintainance of liabson office are received from foreign company abroad.

Under the above said circumstances, whether can it actually be called as liason office as per the definition provided by RBI?

Does it amount to permanant establishment in India?

Rajesh Kumar

Rajesh Kumar (Expert)
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20 March 2009 It is a liason office under FEMA. Permission of RBI is required as without that permission the office cannot operate a bank account in India in Indian currency.
The term permanament estblishment is very wide, and also covered under the term "business connection" in Section 9 of the IT Act.
The transaction should be thoroughally examined to avoid any problem at later stage.

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