A non-resident holding company (A) has an Indian subsidiary company (B). This company also has another non-resident subsidiary (C).
At times C, which does not have any office in India but has clients in India, instructs B (not as per any agreement) to perform services (such as meeting with clients etc) on its behalf. For these services rendered, A (not C) reimburses B at cost.
My quieries are:
1) Since A is reimbursing C at cost and no mark-up is made, would there be any TP impact?
2) Would B or any employee of B constitute a Permanenet Establishment of C in India, making C liable to tax in India?
3) If yes in 2 above, is there any provision under the Income Tax Act which would consider the PE as liable to tax of foreign company?
Thanks .
CAclubindia
