Permanent Establishment taxability case
This query is : Resolved
18 July 2011
Dear Experts, please help me in solving the following query:
Suppose there is a USA company which provides services. Further there is another company in India which falls under the definition of permanent establishment(PE) of the former USA Co.,And there is no other PE for the USA Co. in India.
Further the USA Co. provides any services (which is in nature of business income) to the Indian (PE)Co.
In such a case, whether such income shall be chargeable to tax in India on account of having a PE in India as per article 7 of the DTAA?
Or while applying article 7 is it required that there should be a PE other than the 2 companies transacting?
Suppose there is a USA company which provides services. Further there is another company in India which falls under the definition of permanent establishment(PE) of the former USA Co.,And there is no other PE for the USA Co. in India.
Further the USA Co. provides any services (which is in nature of business income) to the Indian (PE)Co.
In such a case, whether such income shall be chargeable to tax in India on account of having a PE in India as per article 7 of the DTAA?
Or while applying article 7 is it required that there should be a PE other than the 2 companies transacting?
19 July 2011
Such income shall be chargeable to tax in India on account of having a PE in India as per article 7 of the DTAA.
Anuj
+91-9810106211
Anuj
+91-9810106211
19 July 2011
Also kindly see that only profit attributable to operations in India of Company from USA is taxable in India.
19 July 2011
But please clarify how the Indian company is PE of US Company.
Anuj
+91-9810106211
Anuj
+91-9810106211
20 July 2011
Say that the Indian Co. is a dependent agent of the USA Co. Then I guess it shall form a PE under article 5.
My confusion is while applying article 7 is it required that there should be a PE other than the 2 companies transacting? or even a transaction between a Co. & its PE (as detailed above) is sufficient to be made taxable in India?
My confusion is while applying article 7 is it required that there should be a PE other than the 2 companies transacting? or even a transaction between a Co. & its PE (as detailed above) is sufficient to be made taxable in India?
20 July 2011
In international taxation parlance a foreign company if earning BUSINESS INCOME shall be liable to tax in the source country(country where income is earned) only when the foreign Company has a PE in Source Country.
Here the Indian Agent is a PE of foreign company and based on relationship between Indian and foreign company the income attributable to Indian operations is taxable in India.
Anuj
+91-9810106211
femaquery@gmail.com
Here the Indian Agent is a PE of foreign company and based on relationship between Indian and foreign company the income attributable to Indian operations is taxable in India.
Anuj
+91-9810106211
femaquery@gmail.com
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Refund Annexure-B
- Liable to deduct tds and 44ADA
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- Sale of Equity shares for Purchase of Residential Property
- ECO SUPPLY REPORTIONG IN GSTR-1
- Internship/Academic shown in Salary Pay Slip of a Doctor
- Refund of 20%pre-deposit paid for stay application
- Payment to foreign customer
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
