international taxation digest · case nos. international taxation digest ... case nos. position...
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CASE NOS.
Chapter-heads I-5
List of cases digested I-15-I-127
List of cases affirmed/reversed/overruled/approved/disapproved I-129-I-140
List of cases against which SLP Dismissed/Granted bySupreme Court I-141-I-143
ARTICLE 2 : TAXES COVERED
� Tax, connotation of 1-7
ARTICLE 3 : GENERAL DEFINITIONS
� General 8
� Person 9
ARTICLE 4 : RESIDENT
� General 10-19
� Company 20-43
� Firm 44-63
� Hindu undivided family 64-79
� Association of persons 80
� Individual 81-186
ARTICLE 5 : PERMANENT ESTABLISHMENT
� General 187-189
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CASE NOS.
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INTERNATIONAL TAXATION DIGEST
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CASE NOS.
� Agency PE 190-228
� Construction/installation PE 229-256
� Fixed PE, Place of business 257-292
� Liaison office 293-314B
� Project office/branch office 315-319
� Service PE 320-336
� Subsidiary PE 337-349
� Supervisory PE 350-358
� Reassessment 359-365
� Others 366-379
ARTICLE 6 : INCOME FROM IMMOVABLE PROPERTY
� Scope of provision 380-382
ARTICLE 7 : BUSINESS PROFITS
� General 383-390
� General principles under section 9 of the 1961 Act andsection 42 of the 1922 Act 390A-390N
� Business connection 391-496
� Business profit vs. Royalty 497-519
� Commission 520-599
� Composite contract 600-611A
� Condition as to existence of PE 612-676
� DTAA with no FTS provision 677-679
� Expenses, allowability of 680-685
� Foreign PE, profit arising from 686-688
� MAT provisions 689
� Offshore supplies 690-703A
� Profit attributable to PE/Apportionment of income 704-743
� Purchase of goods for export 744-753
� Reimbursement of expenses 754-779
� Right to tax 780
� Services rendered/works executed outside India 781-835
� Situs of contract, relevance of 836-837
� Transactions with head office 838-855
� Penalty 856-858
CONTENTS I-8
CASE NOS.
� Reassessment 859-862
� Revision 863
� Others 864-893
ARTICLE 8 : SHIPPING, INLAND WATERWAYS TRANSPORTAND AIR TRANSPORT
� General 894-898
� Control and management, place of 899-909
� Operation of ships or an aircraft 910-960
� Owner of ship 961-966
� Liable to tax, connotation of 967
� Others 968-972
ARTICLE 10 : DIVIDEND
� General 973
� Taxing right 974-979
� Liable to tax, connotation of 980
� Rate of tax 981-985
� Quantum of relief 986-994
� Others 995-997
� Position under 1922 Act 998
ARTICLE 11 : INTEREST
� General 999-1015
� Beneficial owner 1016
� Bill discounting 1017-1018
� Interest paid by branch to head office 1019-1037
� Interest on bank deposits 1038-1042
� Interest on income tax refund 1043-1060
� Interest on ECB loan 1061-1065
� Interest paid by subsidiary 1066
� Interest on bonds/debentures 1067-1078
� Usance interest 1079-1082
� Rate of tax 1083-1084
� Others 1085-1090A
I-9 CONTENTS
CASE NOS.
� Position prior to 1-6-1976 1091
� Position under 1922 Act 1092-1093
ARTICLE 12 : ROYALTIES/FEES FOR TECHNICAL SERVICES
� General 1094-1166
� Accreditation fee 1167
� Advertisement service 1168-1175A
� Advisory, consultancy and professional service 1176-1227
� Affiliation fee 1228
� Air traffic service 1229
� Annual maintenance service 1230
� Arranger fee 1231-1233
� Beneficial owner 1234-1235
� Bio-analytical services 1236
� Broadcasting service 1237-1259
� Certification service 1260-1267
� Cinematographic films rights 1268-1276
� Clinical trial services 1277-1280
� Commission 1281-1305
� Composite contract 1306-1309
� Computer software 1310-1438
� Construction activity 1439-1440
� Credit rating services 1440A
� Database, use of 1441-1455
� Data processing services 1456-1471
� Debtor collection services 1472
� Design, drawing and documentation/technicalcollaborations/technical services 1473-1569
� Dredging work 1570
� Event management services 1571
� Education service 1572-1578
� Feasibility report 1579-1581
� Financial and accounting services 1582-1584
� Forex fluctuation gains 1585-1586
� Guarantee fee 1587
� Health-care service 1588-1589
� Information technology support services 1590-1597
CONTENTS I-10
CASE NOS.
� Installation services 1598-1607
� Insurance service 1608-1609
� Intellectual property rights, use of 1610-1615
� Lease line charges 1616-1621
� Legal services 1622-1623
� Logistic services 1624-1625
� Make available 1626-1698
� Management service 1699-1717
� Marketing services 1718-1725
� Mineral oil exploration services 1726-1733
� News agency 1734
� Penalty 1735-1737
� Photograph, use of 1738
� Principle of mutuality 1739
� Procurement service 1740-1742
� Rate of tax 1743-1760A
� Recruitment agency 1761-1763
� Referral fee 1764-1765
� Repair and maintenance service 1766-1774
� Research work 1775-1783
� Retainership charges 1784
� Reimbursement of expenses 1785-1802
� Satellite/transponder, use of 1803-1817
� Secondment of employees 1818-1830
� Server, maintenance services 1831-1833
� Specialized knowledge and expertise 1834-1837
� Standard operating procedure 1838
� Subscription fee 1839-1841
� Supervisory service 1842-1850
� Survey fee 1851-1852
� Technical services/technical collaboration/Telecom 1853-1883service/transmission services
� Transmission charges 1884
� Testing service 1885-1889
� Trademark/patent, use of 1890-1897
� Training services 1898-1911
� Translation services 1912
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CASE NOS.
� Vessel hire charges 1913-1919
� Warehousing services 1920-1921
� Web hosting services 1922
� Wide area network services 1923
� Agreement entered prior to 1-4-1976 1924-1945
� Others 1946-1979
ARTICLE 13 : CAPITAL GAIN
� Scope of provision 1980-1988
� Assets situated outside India 1989-1995
� Buy back of shares 1996-1999
� Controlling interest 2000-2002
� FIIs, in case of 2003-2008
� Government securities 2009
� Immovable property 2010-2013
� Movable assets 2014-2016
� Mutual fund units 2017
� Other property, transfer of 2018-2020
� Shares/units, transfer of 2021-2063
� Indirect transfer 2064
� Reassessment 2065-2066
� Others 2067
ARTICLE 14 : INDEPENDENT PERSONAL SERVICES
� General 2068-2069
� Article 14 vs. Article 7 2070
� Article 14 vs. Article 12 2071-2072
� Professional services, meaning of 2073-2075
� Stay in India 2076-2078
� Audit services 2079-2082
� Film shooting, in case of 2083
� Legal services 2084-2094
� Scientific services 2095
� Software development services 2096
� Supervisory services 2097
� Partnership firm, in case of 2098-2103
CONTENTS I-12
CASE NOS.
ARTICLE 15 : INCOME FROM EMPLOYMENT
� Scope of provision 2104-2154
� Salary vs. Fees for technical services 2155
� Off break period, salary for 2156-2164
� Perquisites 2165-2169
� Retention money 2170
� Salary payable by Government outside India 2171-2173
� Others 2174-2176
ARTICLE 16 : DIRECTOR’S FEES
� Scope of provision 2177-2178
ARTICLE 17 : ENTERTAINERS & SPORTS PERSONS
� Scope of provision 2179-2182
ARTICLE 18 : PENSION
� Scope of provision 2183-2187
ARTICLE 19 : GOVERNMENT SERVICE
� Scope of provision 2188
ARTICLE 21 : OTHER INCOME
� Scope of provision 2189-2195
ARTICLE 23A : ELIMINATION OF DOUBLE TAXATION
� Scope of provisions 2196-2207
� Computation of relief 2207A-2256
� Overriding effect of DTAA 2257-2293
ARTICLE 24 : NON-DISCRIMINATION
� Scope of provision 2294-2324
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CASE NOS.
ARTICLE 25 : MUTUAL AGREEMENT PROCEDURE
� Scope of provision 2325-2333
ARTICLE 30 : ENTRY INTO FORCE
� Scope of provision 2334-2337
INDIAN INCOME-TAX ACT, 1961
� Foreign company, fees for technical services [section 10(6A)] 2338-2341
� Rule 10 2342-2351
� Shipping business, profits and gains in case of non-residents[section 44B] 2352-2382
� Mineral oils, special provisions for computing profits andgains in connection with business of exploration, etc. of[section 44BB] 2383-2534
� Aircraft, special provisions for computing profits andgains of business of operation of, in case of, non-residents[section 44BBA] 2535-2538
� Civil construction business, special provisions for computingprofits of foreign companies engaged in [section 44BBB] 2539-2549
� Head office expenses [section 44C] 2550-2596
� Royalties in case of foreign companies [section 44D] 2597-2624
� Royalties, in case of non-resident [section 44DA] 2625-2628
� Non-resident, special provisions relating to certain income[sections 115C to 115-I] 2629-2644
� Shipping business in case of non-resident [section 172] 2645-2682
� Non-resident, agent of [section 163] 2683-2794
� Interest, etc., paid to non-resident without deduction of taxat source [section 40(a)(i)] 2795-2871
� Non-resident, payment to - Deduction of tax at source[section 195] 2872-3002
PAGE NO.
SUBJECT INDEX i-xviii
CONTENTS I-14
CASE NOS.
Chapter-heads I-5
List of cases digested I-15-I-146
List of cases affirmed/reversed/overruled/approved/disapproved I-147-I-152
List of cases against which SLP Dismissed/Granted bySupreme Court I-153-I-154
SECTION 92 : COMPUTATION OF INCOME FROM INTER-NATIONAL TRANSACTION HAVING REGARD TO ARM’SLENGTH PRICE
� Scope of provision 1-26
� Transactions with AE alone are covered 27-34
� Burden of proof 35-38
� Multiple transactions, in case of 39-40
� Advance ruling, in case of 41
� Section 92 vs. Section 9 42
� Section 92 vs. Section 45 43
SECTION 92A : ASSOCIATED ENTERPRISE
� Conditions precedent 44-51
� ‘Influence’ as occurring in section 92A(2)(i) 52
� Illustrations 53-61
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CASE NOS.
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TRANSFER PRICING DIGEST
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CASE NOS.
SECTION 92B : INTERNATIONAL TRANSACTION
� Conditions precedent 62-77
� AMP expenses 78-108
� Branch office/project office, transaction with 109-111
� Business transfer 112
� Call option rights 113-114
� Corporate guarantee 115-122
� Lending or borrowing/capital financing 123-141
� Reimbursement of expenses 142
� Pre-incorporation expenses 143
� Royalty, payment of 144-146
� Shares issued at premium 147-154
� Share application money 155-163
� Shareholder’s deposit 164
� Others 165-175
SECTION 92BA : SPECIFIED DOMESTIC TRANSACTION
� Scope of provisions 176
SECTION 92C : METHODS FOR DETERMINING ARM’SLENGTH PRICE
� General 177-184
� Most appropriate method, determination of 185-201
� Rule 10A 202
� Rule 10B 203-216
� Berry ratio 217-221
� Bright line test 222-225
� Cost plus method 226-246
� Cup method 247-383
� Discounted cash flow method 384-387
� Excess earning method 388
� Profit split method 389-399
� Resale price method 400-440
� TNM method 441-562
� Others 563-578
CONTENTS I-8
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CASE NOS.
SECTION 92C : COMPARABLES - GENERAL PRINCIPLES
� General 579-624
� Recording of reasons 625-630
SECTION 92C : COMPARABLES - FUNCTIONAL SIMILARITY
� General 631-651
� BPO-Call centre 652-673
� Business support services 674-705
� Consultancy service providers 706-709
� Engineering services 710-737
� Health case/pharma supplies services 738-742
� High end service providers 743-746
� Infrastructure management services 747
� Insurance services 748
� Investment advisory services 749-790
� Information Technology Enables Services (ITES) 791-928
� Job workers 929
� Knowledge Process Outsourcing (KPO) 930-948
� Manufacturer 949-968
� Marketing support services 969-1018
� Medical transcription services 1019-1022
� Publisher, in case of 1023-1024
� R&D services providers, in case of 1025-1047
� Ship management services 1048-1049
� Software consultancy/development services 1050-1385
� Technical support service provider 1386-1391
� Traders 1392-1398
� Others 1399-1450
SECTION 92C : COMPARABLES - FACTORS DETERMININGSUITABILITY OF COMPARABLES
� Abnormal events 1451-1545
� Accounting year 1546-1585
� Brand value 1586-1631
I-9 CONTENTS
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CASE NOS.
� Current year vs. Multiple year data 1632-1667
� Data in public domain 1668-1694
� Employees cost filter 1695-1743
� Exclusion of comparable selected by assessee himself 1744-1758
� Export filter 1759-1778
� Financial statement 1779-1792
� Foreign comparable 1793-1801
� Geographical location of comparables 1802-1808
� Government/public companies 1809-1819
� Internal comparables 1820-1827
� Import filter 1828-1829
� Intangible assets 1830-1833
� Loss making company 1834-1881
� Product line/customer base 1882-1886
� Profit margin/profit level indicator 1887-1927
� R&D filter 1928
� Res judicata 1929-1942
� Revenue filter 1943-1947
� Related party transactions 1948-2050
� Segmental result 2051-2151
� Selection of new comparable 2152
� Size and economics of scale/high risk companies 2153-2195
� Super profit making companies 2196-2236
� Turnover filter 2237-2367
� Unreliable financial statement 2368-2381
� Others 2382-2456
SECTION 92C : TRANSFER PRICING ADJUSTMENTS -GENERAL PRINCIPLES
� International transactions with AEs 2457-2505
� Benefit from transaction/allowability of expenditure 2506-2523
� Other general issues 2524-2565
CONTENTS I-10
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CASE NOS.
SECTION 92C : TRANSFER PRICING ADJUSTMENTS - ILLUS-TRATIONS
� Administrative services 2566-2569
� Aggregation of transactions 2570-2589
� Allocation of expenses 2590-2610
� AMP expenses 2611-2679
� Assignment fee 2680
� Capacity utilization 2681-2715
� Commission 2716-2750
� Compensation 2751-2752
� Consultancy fees 2753-2757
� Corporate charges 2758-2760
� Cost of goods sold 2761-2767
� Custom duty 2768
� Depreciation 2769-2793
� Discounts 2794-2797
� Distribution fee 2798
� Dividends 2799
� Employee cost 2800-2801
� Entity level vs. Transaction level 2802-2806
� ESOP 2807-2808
� Export/Domestic sale 2809-2825
� Foreign exchange gain/loss 2826-2902
� Financial service fees 2903
� Forward contracts 2904
� Goodwill 2905
� Guarantee commission 2906-2941
� Head office expenses 2942-2943
� HRM expenses 2944
� Import duty 2945-2946
� Indirect cost 2947-2949
� Interest 2950-3140
� Lease rental 3141
� Legal and professional fees 3142-3144
� License fees 3145-3146
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CASE NOS.
� Loss in transit 3147-3148
� Management fee 3149-3181
� Marketing expenses 3182-3191
� Non-compete fees 3192
� Obsolete stock, provisions for 3193
� Operating profit/cost, computation of 3194-3310
� Product recall expenses 3311
� Purchases/imports 3312-3338
� Raw material 3339-3354
� Reimbursement of expenses 3355-3393
� Research expenses 3394-3395
� Risk adjustment 3396-3439
� Royalty 3440-3556
� Salaries 3557-3562
� Samples 3563
� SAP expenses 3564-3566
� Sponsorship cost 3567
� Support services fee 3568-3577
� Technical services fee 3578-3585
� Trademark expenses 3586-3589
� Travelling expenses 3590
� Volume adjustment 3591-3592
� Working capital adjustments 3593-3657
� Reassessment 3658-3660
� Others 3661-3729
SECTION 92C(4) : COMPUTATION OF TOTAL INCOME
� Sub-section (4) of section 92C 3730-3738
SECTION 92CA : REFERENCE TO TPO
� Application of provision 3739-3760
� Illustrations 3761-3845
CONTENTS I-12
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CASE NOS.
SECTION 92CB : SAFE HARBOUR RULES
� General 3846-3873
� 5% variation in pricing - Position prior to 1-10-2009 3874-3882
� Illustrations 3883-3948
SECTION 92D READ WITH SECTIONS 271AA & 271G :MAINTENANCE AND KEEPING OF INFORMATION ANDDOCUMENTS
� Illustrations 3949-3976
SECTION 92E READ WITH SECTION 271BA : REPORT FROMACCOUNTANTS
� Application of provision 3977-3984
SECTION 144C : DISPUTE RESOLUTION PANEL
� Jurisdiction and powers of DRP 3985-4027
� Constitution of DRP 4028
� Section 144C v. Section 153 4029
� Eligible assessee 4030-4034
� Passing assessment order 4035-4058
� Speaking order 4059-4104
� Period of limitation 4105-4112
� Writ remedy 4113-4121
� Others 4122-4139
SECTION 271(1)(c) : PENALTY
� Illustrations 4140-4154
OTHERS
� Stay of demand 4155-4161
PAGE NO.
SUBJECT INDEX i-xii
I-13 CONTENTS
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