Dear all,
I have a doubt on the tax implications for income earned by a foreign subsidiary.
A ltd has a wholly owned subsidiary B ltd in Poland which is carrying its operations there but the management vests with A Ltd. In such a scenario, what will be the tax implications on the income earned by B ltd. Is it required to file a return of income in Poland and India
What will be the implications if B Ltd was not a subsidiary but a branch office ??
Regards
Jaishree
As per sec 6 (3)of Income Tax Act,1961.
"A company is said to be resident in India in any previous year, if—
(i) it is an Indian company ; or
(ii) during that year, the control and management of its affairs is situated wholly in India."
In your case I doubt whether the control and management was WHOLLY situated in India and is a question of debate.
In case of Branch office the regulations under FEMA need to be followed as well the accounts of Branch need to be clubbed with parent Balance Sheet under the Income Tax Act.
Anuj
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