Tax Glimpses 2010

Tax Glimpses - 2010
A Newsletter covering noteworthy tax developments
Topics Covered
► Assessment
► Business Deduction
► Capital Gains
► Permanent Establishment
► Personal Taxes
► Royalty
l
► Transfer Pricing
► Tax Withholding
g
► Miscellaneous
Tax Glimpses – 2010: Judgement Home
Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes
Royalty Transfer Pricing Tax Withholding Miscellaneous
to the effect that 10% of advertisement and withdrawn. Therefore, there was no impediment to
subscription revenue received during the relevant giving effect to the resolution as it was. The order
previous year would be deemed to be the net profit passed in consequence to the MAP resolution was
chargeable to tax. an order under section 143(3) read with section 90
and it had been made in substitution of the earlier
The TO passed fresh orders under section 154 read
order under section 143(3) of the Act.
with section 143(3) of the Act to give effect to the MAP
resolution
l i under d section
i 90 off theh Act, bbringing
i i to tax • In
I view
i off th
the resolution,
l ti th
the CIT(A) h
had
d erred
d iin
10% of the gross receipts, without allowing the Indian upholding the order of the TO in which the profit
representative’s commission. was determined at 10% of the gross revenue.
The Commissioner of Income-tax Appeals (“CIT(A)”) • The assessee was given permission to litigate on the
h ld that
held th t th
the CA d
determined
t i d th
the profit
fit att 10% off matter after the resolution of the dispute through
advertisement and subscription revenue received MAP proceedings even though the TO did not fully
during the relevant year. It decided that in the absence give effect to the resolution of the CA.
of any direction by the CA to determine profit on the • The TO was allowed to approach the CA for
An order passed giving effect to a resolution basis of net advertisement revenue, the claim clarification of any doubt in the interpretation of the
made under the Mutual Agreement Procedure regarding the deduction of the Indian representative’s agreement, more so when the computation of profit
is an appealable order under section 246A commission could not be allowed. was annexed with the resolution of the US CA. Since
he had not done so, the assessee was left with no
Facts Tribunal Ruling other alternative but to approach the appellate
The assessee, a non-resident
Th id company, derived
d i d authority
h i for f appropriate
i relief.
li f
advertising and subscription revenue through its The Income-tax Appellate Tribunal (“Tribunal”) held • The argument regarding correlative relief in the US
representative in India. The tax officer (“TO”) assessed that: was not held to be relevant as the question was
total income under section 143(3) of the Income-tax
• The resolution of the Indian and US CA was that the regarding the computation of income under the
Act, 1961 (“the Act”), by attributing 30% of the
deemed
d d net profit
fi was to b
be calculated
l l d at 10%% off agreement
agreement.
revenue (net of India representative commission) as
advertising and subscription revenue received from Cable News Network LP, LLP v. ADIT [2010-TIOL-
profits taxable in India.
Indian sources. 20-ITAT-DEL]
The assessee applied for resolution of the dispute by
• The only pre-condition for giving effect to the
way of the Mutual Agreement Procedure (“MAP”)
mutually agreed resolution was mentioned in Rule
under the Indo-US tax treaty. A resolution was passed
44H(3) of the Rules. The assessee had given its
by the Indian and the US competent authorities (“CA”)
consent for the implementation of the MAP and the
appeal against the order was stated to have been
PwC 2
Tax deduction at source is no bar for the payer Tribunal Ruling the case of Saipem UK Ltd. v. DDIT [2006] 298 ITR
to be held as an agent of a non-resident payee, (AT) 113 (Mum.), wherein it was held that taxing the
The Tribunal observed and held,
held with respect to the
but income cannot be assessed more than once same amount in the hands of the agent and the
representative agent question, as follows:
principal was against the cardinal principles for
Facts • The proceedings under section 163 of the Act were levying tax on income.
only to ensure that a person would be regarded as a
Alcan Aluminium Ltd. (“Alcan”), a Canadian company, Accordingly, the Tribunal held that the income having
p
representative agent
g onlyy under certain conditions
h d acquired
had i d shares
h iin Indian
di Aluminium
l i i Company b
been b
brought
h to tax iin the
h hhands
d off the
h principal,
i i l theh
and that no liability would be fastened on the
Ltd. (“Indal”). It sold its entire holding in Indal to the same income could not be once again assessed in the
representative agent, when an order under section
assessee. Alcan, being a non-resident company and hands of the representative agent.
163 of the Act was passed. Therefore, withholding of
holding shares in an Indian company, was subject to
tax by an agent would not bar an order under Hindalco Industries Ltd. v. DCIT [2010] 133 TTJ 40
p
capital g
gains tax under section 45 read with section 4 48
section
ti 163 off the
th Act.
A t (M )
(Mum)
of the Act.
• The assessee’s act of withholding tax and its
The TO passed an order to withhold tax at a lower rate
payment thereof under section 195 of the Act would
for INR 400 million under section 197 of the Act,
not bar the TO from proceeding and passing an
which was complied with by the assessee.
order under section 163 of the Act.
Act
The TO also held that the assessee was the
• The law did not contemplate any time limit for
representative agent of Alcan under section 163 of the
initiating proceedings and that the proceedings
Act, and therefore assessed the capital gains in the
against the principal were also not time barred.
hands of the assessee. Simultaneously, the TO also
assessed Alcan under section 143(3) of the Act and • Accordingly,
d l the h assessee was treated
d as a
determined capital gains tax liability on the transfer of representative agent of Alcan.
shares.
The Tribunal held as relevant, with respect to the issue
In Alcan’s appeal before the Tribunal, the Tribunal of taxability of the capital gains in the hands of the
h ld that
held h AlAlcan would
ld be
b taxedd at the
h rate off 10%
% on principal
i i l and d the
th representative
t ti agent, t th
the d
decision
i i off
the capital gains on the sale of shares and it granted the Bombay High Court (“HC”) in the case of the
relief to the company. Trustees of Chaturbhuj Raghavji Trust v. CIT [1963]
50 ITR 693 (Bom.), where it was held that income
The assessee also filed another appeal before the
having been brought to tax in the hands of a real
Tribunal against the order of the CIT(A) upholding its
person could not be taxed again in the hands of the
treatment as the representative agent of Alcan.
representative agent. It also relied on its decision in
PwC 3
debts to be written off as irrecoverable in the books and disallowed them. The CIT(A) placed reliance on
of account of the assessee. the decision of the Special Bench in the case of ITO v.
Daga Capital Management Pvt. Ltd. [2008] 312 ITR 1
• When bad debt occurred, the bad debt account was
(Mum.) and confirmed the addition made by the TO
debited and the customer’s account credited, thus
under section 14A of the Act. The CIT(A) also
closing the account of the customer. In the case of
confirmed the disallowance of expenses incurred for
companies, the provision was deducted from the
the increase of share capital and of software expenses,
sundry
d d debtors
b account.
relying on the decision of the Rajasthan HC in the case
• The TO had not examined whether the debt had in of CIT v. Arawali Construction Pvt. Ltd. [2002] 259
fact been written off in the accounts of the assessee. ITR 30 (Raj.).
Hence, the matter was remanded to the TO for the
g
Tribunal Ruling
li it d purpose off examining
limited i i whether
h th th the b
bad
dddebt
bt
had actually been written off in the accounts of the The Tribunal held that it was not permissible for the
assessee. TO to travel beyond section 44 and the First Schedule,
and make a disallowance by applying section 14A of
TRF Limited v. CIT [2010-TIOL-15-SC-IT]
The writing off of bad debts in the books of the Act, in the case of an insurance company. In this
account will suffice to claim deduction regard, reliance was placed on the Delhi Tribunal
In the case of a life insurance company,
decision in the case of Oriental Insurance Co. Ltd. v.
disallowance under section 14A and
Facts ACIT [2010] 40 SOT 19 (Delhi)(URO) wherein it was
disallowance of software expenses and
The issue before the Supreme Court (“SC”) was held that section 44 of the Act provided for the
expenses for the increase of share capital are
whether
h h an assessee h has to establish
bli h that
h the
h ddebt
b application of special provisions for the computation
not attracted
d
advanced by it had in fact become irrecoverable, or of the profits and gains of insurance businesses in
whether writing off the debt as irrecoverable in the Facts accordance with Rule 5 of the First Schedule.
accounts would be sufficient to claim deduction after In relation to other disallowances, the Tribunal placed
The assessee was in the life insurance business. It had
the amendment to the provisions of section 36(1)(vii) reliance on the SC’s decision in the case of Life
filed its return of income declaring losses.
losses It had
of the Act. Insurance Corporation of India v. CIT [1964] 51 ITR
claimed exemption of dividend income under section
SC Ruling 10(33) of the Act and had not offered any expenses 773 (SC) wherein it was held that “the assessment of
relating to the earning of such exempt dividend profits of an insurance business is completely
The SC held that, governed by the Schedule to the Income-tax Act and
income. The TO calculated the disallowance under
• After 1 April, 1989 , it was not necessary for an section 14A of the Act. Furthermore, the TO treated th TO has
the h no power tto d do anything
thi nott contained
t i d iin
assessee to establish that the debt in fact has the software expenses and the expenses incurred for it; there is no general right to correct errors in the
become irrecoverable. It was enough for the bad the increase of share capital, as capital expenditure accounts of an insurance business”. The Tribunal
observed that in the case of a company engaged in life
PwC 4
insurance business, the provisions of section 44, read payments were payment to head office, i.e. ‘from self could not recharacterise the debt capital as equity
with the rules in the First Schedule to the Act, should to self’ and in terms of Article 7(3)(b) of the India- capital, and, accordingly, disallow the interest
apply and the TO had no power to do anything not Belgium tax treaty, interest payments from a branch to payments.
contained in section 44 of the Act. Considering that the head office were not deductible while computing
• Merely because a limitation provision was desirable
these special provisions have a non obstante clause, the profits of the PE. The TO applied thin
in the tax treaty or domestic law, this would not
the Tribunal held that the TO was not permitted to capitalisation rules and recharacterised the debt
prohibit any efforts to take advantage of an existing
travel beyond these provisions. Hence, the capital into equity capital for the purpose of examining
provision,
i i or llack
k thereof,
h f iin the
h tax treaty.
disallowance of expenses for the increase in share the claim of deduction of interest on such debt capital.
capital, and of software expenses, was held not to be Accordingly, he held that the interest was not • Any attempt to invoke thin capitalisation vis-à-vis
correct. deductible. the PE of a Belgian enterprise would be contrary to
the scheme of non-discrimination envisaged by
Birla Sunlife
f Insurance Company
p y Ltd. v. DCIT [2010- ( ) upheld
The CIT(A) p the order of the TO.
A ti l 24(5) off the
Article th tax
t ttreaty,
t since
i no such
h
TIOL-535-ITAT-MUM]
Tribunal Ruling limitations are placed on domestic enterprises.
Interest expense cannot be disallowed in the The Tribunal held that: • Tax considerations involved in planning the capital
absence of thin capitalisation rules structure of the assessee did not transform a tax
• Under the India-Belgium tax treaty, the
deductible expense into an non-tax deductible
deductibility of interest was not affected whether the
Facts expense.
interest expense was incurred in India by the PE, or
The assessee company was registered in Belgium. The in Belgium by the head office of the assessee. Besix Kier Dabhol v. DDIT [2010-TII-158-ITAT-
entire share capital of the assessee was held by NA MUM-INTL]
• The taxable unit under the Act was the assessee and
Bexis SA and Kier International (Investments) LtdLtd. in
not its branch
b h or PE in India.
d
the ratio of 60:40. Its permanent establishment (“PE”) Income tax payment outside India is not
in India directly borrowed money from the • A company and its shareholders had separate allowable as a deduction from total income
shareholders, without routing the borrowings through existences and their contracts were enforceable like
Facts
the head office, in the same ratio in which the equity contracts with any independent person. Therefore,
was held
h ld b
by the
h shareholders,
h h ld ffor the
h purpose off the
h i t
interest
t paid
id tto th
the shareholder
h h ld would ld b
be ttreated
t d iin • Tata Sons (the “assessee”)
assessee ) was an investment
business of the PE, which was the only business the same way as interest paid to independent company holding equity shares of Tata Group
conducted by the assessee. The debt-to-equity ratio outside parties. companies.
worked out to 248:1. • There were no thin capitalisation rules in India. The • The assessee had claimed a deduction of federal and
The assessee claimed
Th l i dad deduction
d ti off iinterest
t t paid
id on thin capitalisation rules under the Belgian tax laws state taxes paid abroad ((“foreign
foreign taxes
taxes”)) as normal
the borrowings from the shareholders. The TO could not be applied to the assessee while business expenditure under section 37(1) of the Act.
disallowed the claim on the grounds that these computing taxable income in India. Thus, the TO The assessee had also claimed tax credit on these
foreign taxes under sections 90 and 91 of the Act.
PwC 5
• The CIT(A), relying on the Tribunal’s decision in the • The definition of the term ‘tax’, which is subject to had filed its return of income declaring a loss and
assessee’s own case in previous years, allowed the the general rider “unless the context requires” claimed dividend income as exempt from tax under
deduction claimed by the assessee. cannot be
b viewed
i d on a standalone
d l b
basis
i iin iisolation
l i section 10(33) of the Act. The TO disallowed certain
from the context in which the expression is set-out. expenses as being attributable to dividend income.
• The assessee contended that:
• The provisions of section 91 of the Act would apply The CIT(A) held that no expenditure was attributable
- Foreign taxes were laid out and expended wholly to state income taxes as well. Hence, these would to the earning of dividend receipts and deleted the
and exclusivelyy for the p
purposes
p of the business,, also b
be covered by disallowance under Explanation
p 1 addition. On further appeal, the Tribunal followed the
and hence would be eligible for deduction under to section 40(a)(ii) of the Act. decision of the Special Bench in the case of ITO v.
section 37(1) of the Act. • Accordingly, the deduction of federal and state taxes Daga Capital Management Pvt. Ltd. [2009] 117 ITD
paid in the USA would not be allowed under section 169 (Mum.)(SB), and held that sub-sections (2) and
- The disallowance under section 40(a)(ii) of the
37(1) of the Act. (3) of section 14A of the Act were procedural in nature
Act was in respect of ‘tax’. Under section 2(43) of
anddhhadd retrospective
i effect.
ff Th
The matter was
the Act the term ‘tax’ only covered ‘income-tax • The relief under section 91 of the Act would be
remanded back to the TO for fresh examination on the
chargeable under the provisions of the Act’ and available on state income tax paid in the USA.
basis of the provisions of section 14A(2) of the Act.
hence, the disallowance under section 40(a)(ii)
DCIT v. Tata Sons Ltd. [ITA No. 4776/Mum/04],
cannot extend to taxes other than those paid Source : www.itatonline.com HC Ruling
under the Act.
Act
Editor’s note
The HC held as follows:
Tribunal Ruling Though the Tribunal held that relief under section 91
of the Act would be available also on state income tax Section 14A v. Dividend income and income
paid in the USA, section 91 of the Act is applicable only from mutual funds
• Explanation 1 to section 40(a)(ii) was inserted by the when
h there
h was no agreement b between the
h relevant
l
Finance Act, 2006 to debar deduction of foreign countries. One may also note that the tax treaty • The additional income tax paid by a domestic
taxes on which tax credit under sections 90 and 91 between India and the USA specifically provides for company under section 115-O(1) of the Act on
the credit of federal taxes only. profits declared, distributed or paid was a charge on
was available. The decisions in the assessee’s own
a component of the profits of the company and not a
case in earlier years had been passed prior to the
Expenditure
E di against
i tax-free
f iincome cannot be
b tax on dividend income paid on behalf of the
insertion.
arbitrarily disallowed by the TO, sections shareholders.
• The level of relief to a taxpayer should not go beyond 14A(2), (3) and Rule 8D are constitutionally • The dividend income and the income from mutual
mitigating the hardship caused to the assessee from valid and Rule 8D is prospective in nature funds covered within the ambit of section 10(33) of
the double taxation of income in more than one tax the Act were not includible in the total income of the
Facts
jurisdiction. The assessee had claimed double relief assessee. Consequently, no deduction would be
for federal as well as state taxes paid, which was The assessee, engaged in the business of allowed in respect of expenditure incurred by the
contrary to the fundamental principles of manufacturing steel furniture, security equipment, assessee in relation to such income which did not
international taxation. typewriters, electronic equipment, machine tools, etc., form part of its total income under the Act.
PwC 6
Plain and grammatical construction Conclusion
Section 14A of the Act determines that a shareholder The HC held that the provisions of section 14A of the
should not receive both the benefit of an exemption Act and that of Rule 8D of the Rules should not be
under section 10(33) of the Act and a deduction in used arbitrarily by the revenue authorities through the
respect of the expenditure incurred towards earning blanket disallowance of an assessee’s claim regarding
tax-free income. expenditure incurred in relation to income not
f
forming
i part off iits totall iincome.
Constitutional validity
Godrej & Boyce Mfg. Co. Ltd. v. DCIT [2010-TIOL-
Therefore, the provisions of sub-sections (2) and (3) of
564-HC-MUM-IT]
section 14A of the Act were constitutionally valid and
the provisions of Rule 8D of the Rules were neither
ultra vires the provisions of section 14A of the Act, nor
did they offend Article 14 of the Indian Constitution.
Rule 8D – Retrospective v. Prospective
The Rule came into force on 24 March

March, 2008
2008. The law
which would apply to an assessment year (“AY”) was
the law prevailing on the first day of April of that year.
Consequently, Rule 8D of the Rules applied only with
effect from AY 2008-09. The rule could not have
application
l in respect off AY 2002-03 in the
h assessee’s ’
case.
Applicability of section 14A if Rule 8D is not

applicable
For periods to which Rule 8D of the Rules and sub-

sections (2) and (3) of section 14A of the Act were not
applicable, apportionment should be done on a
reasonable basis or by a method consistent with the
facts of the case for the purpose of determining
disallowance under section 14A(1) of the Act.
PwC 7
Issue − Gains would be passed on to the ultimate

holding company, i.e. KSPG AG; and
KSPG NH approached the Authority for Advance
Rulings (“AAR”) on whether KSPG NH would be liable − KSPG NH would merely be acting as a conduit to
to tax in India on the capital gains arising from the siphon off the gains to the ultimate holding
transfer of shares of PG India to another non-resident company i.e. KSPG AG.
in terms of the provisions of the Indo-Netherlands tax • The beneficial ownership in the gains could not be
treaty. held to be vested with the ultimate holding
Revenue’s Contentions company, and accordingly, the beneficial provisions
of the Indo-Netherlands tax treaty were applicable
The ‘beneficial owner’ of capital gains arising out of
and the gains would not be liable to tax in India.
the proposed transfer of shares by KSPG NH would be
the ultimate holding company i.e. KSPG AG, and Conclusion
accordingly, the India-Germany tax treaty was This is the first decision in the Indian context on the
applicable, in which case the capital gains could be concept of ‘beneficial ownership’, and will go a long
taxed in India. way towards interpreting the concept of beneficial
The ultimate parent company in Germany is
not to be taxed on the transfer of shares in its AAR Ruling ownership for future cases.
step-down Indian subsidiary by a subsidiary
The AAR held that: KSPG Netherlands Holding B.V. In re [2010-TIOL-
company in the Netherlands
09-ARA-IT]
• There was no factual or legal basis to hold that the
acts
Facts German companyp y was the real beneficial owner of Benefit under the India-Mauritius
India Mauritius tax treaty
the shares and the capital gains that would accrue cannot be denied where the non-resident
The applicant, KSPG Netherlands Holding B.V.
on their transfers. KSPG NH, even though it was a assessee based in Mauritius is a subsidiary of
(“KSPG NH”), was a company incorporated in the
subsidiary company of KSPG AG, was a separate and another non-resident company, based in USA
Netherlands, and was a subsidiary of Germany-based
distinct legal entity having its own board of directors
Kolbenschmidt Pierburg AG (“KSPG AG”). Another
andd managementt systems.
t KSPG NH h hadd also
l made d Facts
German company was the holding company of
significant investments in PG India to broaden the
Pierburg India (“PG India”), a private limited company • The applicant, a company incorporated in
capital base of PG India.
incorporated in India . In November 2008, this Mauritius, was a subsidiary of Converging Arrows
German company sold the entire shareholding in PG • It would be inappropriate to assume that:
Inc., USA, which in turn was a subsidiary of E*Trade
India to KSPG NHNH, and thus
thus, PG India became a Financial Corporation, USA. The applicant was a tax
− Gains accruing on the transfer of shares by KSPG
wholly owned subsidiary of KSPG NH. KSPG NH was resident of Mauritius holding a Tax Residency
NH would not benefit KSPG NH; Gains would
to realise capital gains on the transfer of shares in PG Certificate issued by the Mauritius Tax Authorities.
not enter into the profit and loss account of
India to a non-resident company.
KSPG NH;
PwC 8
• The applicant had sold its equity shares in an Indian the act was done within the framework of the law. Pledge of shares cannot be considered as
company to a company incorporated in Mauritius. Also, treaty shopping through conduit companies transfer
The applicant earned long-term capital gains on this was not against the law and the lifting of the
Facts
sale of shares. corporate veil was not a permissible method by
which to deny the benefits of a tax treaty. Reliance Communications Infrastructure Ltd.
• The applicant sought the AAR’s views as to whether
(“RCIL”) took a loan from its director and pledged
capital gains arising on the sale of shares of an • The scope of the enquiry by the revenue authorities
shares held by it in Reliance Infocomm Ltd. (“RIL”) as
I di company were exemptt ffrom ttax under
Indian d th the ttax should
h ld bbe within
ithi the
th confines
fi off th
the llegall position
iti
security. It also earned fees from RIL for granting
treaty. laid down by the SC in the case of Azadi Bachao
exclusive rights to use an Indefeasible Right of
Andolan (above).
Connectivity (“IRC”) for 20 years.
Revenue’s Contentions
• The shares had been registered in the name of the
The TO accepted the return but the CIT challenged the
• Though the legal ownership resided with the applicant and dividends declared had been received
assessment under section 263 of the Act and treated
applicant, the real and beneficial owner of the by it. The consideration for the sale of shares had
the pledge of shares as extinguishment of rights, and
capital gains was the ultimate parent company in been credited to the applicant's accounts on receipt
hence a transfer under section 2(47) of the Act.
the USA, which controlled the applicant. of the sale price; the applicant had passed a
Accordingly, the CIT imputed capital gains by treating
resolution for reducing its capital and paying
• Despite setting up the Mauritius subsidiary (i.e. the the market value of the pledged shares as sales
dividends to its parent. Hence, the applicant was the
applicant), the US parent in fact carried out the consideration. The CIT also sought to tax the entire
legal owner of the shares and had its own corporate
business in India and exercised the right of amount of IRC fees received by the assessee from RIL,
personality.
ownership in the shares. in the year of receipt itself.
• The exercise of control by a holding company over
• Reliance was p
placed on the decision of the SC in the The assessee contended that the loan was to be repaidp
iits subsidiary
b idi did not dil
dilute the
h separate llegall
case of Union of India v. Azadi Bachao Andolan after a certain period of time, and therefore, it could
identity of subsidiary in the absence of compelling
[2003] 263 ITR 106 (SC) to support the assertion not be treated as a sale of shares. The revenue
reasons for supposing otherwise.
that the question of colourable devices still survived contended that the shares had been dematerialised
and the revenue authorities could examine the real • Accordingly, the AAR held that, by virtue of article from RCIL’s accounts to those of the promoter.
nature of any transaction.
transaction 13(4) of the India-Mauritius
India Mauritius tax treaty
treaty, the applicant
Tribunal Ruling
was not liable to pay capital gains tax in India on the
AAR Ruling transfer of shares of an Indian company to another The Tribunal held that the pledge could not be treated
non-resident. as a transfer under section 2(47) of the Act as there
The AAR observed and held that:
was no passing of the title of the shares to the pledgee.
• The
Th SC iin the
h case off A
Azadi
di B
Bachao
h A Andolan
d l ((above)
b ) E*Trade Mauritius Ltd. In re [2010-TIOL-20-ARA- Furthermore, relying on the SC’s decision in the case
found no legal taboo against treaty shopping and the IT] of CIT v. George Henderson & Co Ltd. [1967] 66 ITR
motive of tax avoidance was not relevant, so long as 622 (SC), the Tribunal held that in the absence of
PwC 9
imputation provisions in the Act, the market value

could not be substituted for the actual sales
consideration (except in the case of the transfer of
land and buildings).
On the issue of the taxation of IRC fees, the Tribunal

observed that only the right to use the network was
granted
t d andd th
thatt th
the contract
t t approximated
i t d a lleasing
i
right for 20 years. The Tribunal relied on the SC’s
decision in the case of Madras Industrial Investment
Corporation Ltd. v. CIT [1997] 4 SCC 666 (SC) and
held that income from IRC should be spread over the
term period and should not be taxed upfront in the
year of receipt itself.
Conclusion
This ruling held that the market value could not be

substituted for the full value of the consideration.
However, after the amendment of section 56(viia) of
the Act, all transactions involving the transfer of
shares of closely held companies are taxable at fair
market
k value.
l
Reliance Communications Infrastructure v. CIT

[2010] 40 DTR 186 (Mum)
PwC 10
grounds that it had no PE in India under the Tribunal Ruling

provisions of the India-Australia tax treaty.
Thee Tribunal
bu a placed
p aced reliance
e a ce oon tthee ad
advance
a ce ruling
u g in
The TO held that the assessee had a PE in India in the case of Brown and Root Inc. v. CIT, In re [1999]
terms of the provisions of Article 5(2)(f) of the India- 237 ITR 156 (AAR) and held that the rationale of that
Australia tax treaty and therefore 10% of the gross ruling was squarely applicable to the facts of the
receipts were taxable in India under the provisions of present case. Thus, the Tribunal upheld the order of
section
ti 44BB BB off the
th AAct.
t th CIT(A)
the CIT(A).
CIT(A) Ruling DDIT v. Clough Projects International Pvt. Ltd.

[2010-TII-55-ITAT-MUM-INTL]
The CIT(A) observed that the assessee was not a
natural resource company and it had no rights over oil
No service PE exposure exists on the
and gas wells, and hence the provisions of Article
deputation of personnel in the absence of
5(2)(f) of the India-Australia tax treaty were not
control and supervision by the foreign
applicable to it. The case was covered by the
company
provisions of Article 5(2)(k) of the India-Australia tax
The relevant clause for determining the
treaty and the required period of six months had not The assessee, a Limited Liability Company was a tax
existence of a PE of an oil and gas service
been completed during the year under consideration; resident of the USA and had entered into an
provider is the construction / installation PE
and thus, for the financial year 2004-05, the assessee arrangement with Lucent Technologies Hindustan
clause, and it comes into effect after the arrival
did not have a PE in India. During the year under Pvt. Ltd. (“the Indian company”) for the deputation of
of supplies / equipment at the site
consideration, the work performed by the assessee was personnel. Under the agreement, the assessee was
li i d to placing
limited l i orders
d for
f the
h offshore
ff h supply
l off responsible
ibl for
f deputing
d ti personnell to
t the
th IIndian
di
Facts
steel and fabrication services outside India. The company under the supervision and control of the
The assessee Australian company was engaged in the delivery of steel commenced on 30 April, 2005. latter. The deputed personnel were to be under the
provision of engineering and construction services to Accordingly, the CIT(A) applied the SC’s decisions in direction, supervision and control of the Indian
various oil and gas companies. It had entered into an j
the cases of Ishikawajima Harima Heavyy Industries company, they would remain on the payroll of the
agreement dated 5 November, 2004 with BG Co. Ltd. v. DIT [2007] 288 ITR 408 (SC) and Hyundai assessee and it would recover the deputation costs
Exploration and Production India Ltd. (“BG”) for the Heavy Industries Co. Ltd. [2007] 291 ITR 482 (SC), from the Indian company.
provision of engineering, procurement and and held that an installation PE would commence
As the assessee had not rendered any services through
installation services. The assessee had raised invoices when the supply of steel arrived at the oil well site,
its personnel it treated the amount reimbursed by the
during the financial year 2004
2004-0505, however,
however the which had occurred in the next financial year.
year No PE
Indian company as its business income. Since there
delivery of steel commenced on 30 April, 2005. For AY existed during the year, as no installation event had
was no PE in India as defined by the India-USA tax
2005-06, the assessee filed a nil tax return on the taken place in India nor had the time period of six
treaty, no income was offered to tax.
months been completed during the year.
PwC 11
The TO held that the assessee rendered services to the assessee as an agent of the non-resident unit-holders • Merely because an assessee was treated as an
Indian company through its personnel in India and on the ground that the non-resident unit-holders had assessee-in-default did not ipso facto imply that it
thus triggered a service PE in terms of clause (l) of received income directly or indirectly from or through was also liable for the tax dues of the person from
Article 5(2) of the India-USA tax treaty. The CIT(A) the assessee. The CIT(A) upheld the order of the TO. whose income it was required to deduct tax.
allowed the assessee’s appeal and held that clause(I) of Whatever taxes are deducted by the assessee in
Assessee’s contentions
Article 5(2) of the India-USA tax treaty was not discharge of its obligation to deduct tax at source
pp
applicable as the assessee had onlyy p
provided p
personnel The assessee argued it could not be regarded as the were to be adjusted
j against
g the actual tax liabilityy of
and these personnel worked under the direction, agent of a non-resident since the redemption proceeds assessee as a representative assessee of the non-
supervision and control of the Indian company. were not taxable in the hands of the non-resident unit- resident. Thus, the proceedings were
holders in India under Article 13 of the India-UAE tax complementary to each other. Merely treating the
The Tribunal held that since the assessee had only
treaty. Furthermore, parallel proceedings, treating the assessee as an agent of non-residents, who were
provided personnel to work under the control and
assessee as the agent of the non-resident
non resident unit-holders,
unit holders otherwise not liable to tax in India according to the
supervision of the Indian company and no technical
on the one hand and, on the other, proceedings for the provisions of a tax treaty, would not affect their tax
services of any kind were rendered by the assessee to
failure to deduct tax at source, could not be initiated liability. The assessee’s objection that it would lead
the Indian company through these personnel, the
simultaneously. This would lead to the double to a multiplicity of proceedings and double taxation
deputation of such personnel could not be considered
recovery of taxes. was devoid of any merit.
as a service PE of the assessee in India.
India
Revenue’s contentions • The provisions for representative assessees were
Argued by PwC Tax Litigation Team
drafted to address situations where non-residents
The revenue argued that the assessee had a dual role,
DDIT v. Tekmark Global Solutions LLC [2010-TII-50- did not have agents in India and should be
one as the agent of the non-resident unit-holders, and
ITAT-MUM-INTL] considered in the light of this. Accordingly, the
the other as the p
payer
y who was required
q to deduct tax
assessee would be regarded as an agent of the non-
from the redemption proceeds paid to the non-
An asset management company paying resident unit-holders.
resident unit-holders.
redemption proceeds to non-resident mutual
Birla Sunlife Asset Management Co. Ltd. v. ITO
fund unit-holders can be regarded as their Tribunal Ruling
[2010] 38 SOT 523 (Mum)
agent in India
The Tribunal held that:
• Income deemed to accrue or arise in the hands of a
Facts
non-resident (and therefore taxable in India)
The assessee Asset Management Company made a included income arising on the transfer of a capital
payment to UAE-based unit-holders on the asset situated in India. Therefore, the assessee was
redemption of units in the debt scheme of a Mutual an agent of the non-resident unit-holders.
Fund without deducting tax at source, on the ground
that such capital gains arising on the redemption of
units were not taxable in India. The TO treated the
PwC 12
Back office operations and software For AY 2003-04, the TO held that eFunds USA had a • The corporate office of eFunds India had an
development services carried out by an Indian PE in India and profits were attributable to the PE. International Division consisting of the President's
subsidiary in a foreign country qualify as a Subsequently, the TO initiated reassessment office and sales team. The President's office
fixed place PE of the foreign company proceedings for other AYs for eFunds India and IT reported to eFunds USA. These activities were
Solution USA. eFunds USA invoked MAP for A.Y. carried on continuously over a period which
Facts
2003-04 and IT Solution USA invoked MAP for A.Y. included the years in question.
3 4 and A.Y. 2004-05.
2003-04 4 5 Without agreeing
g g on the • Therefore,, eFunds USA/IT
/ Solution USA had a
eFunds
F d C Corporation,
ti USA (“eFunds
(“ F d USA”) and d eFunds
F d
issue of existence of a PE, MAP authorities proceeded business connection in India .
IT Solutions Group Inc, USA (“IT Solution USA”) were
to provide directions on the manner of taxing eFunds
two independent companies incorporated under the
USA and IT Solution USA. The TO considered MAP Existence of PE in India
laws of Delaware, USA, and were engaged in (a) ATM
resolution while working out the taxable income, and
management services; (b) electronic payments; (c)
held that eFunds India and IT Solutions USA had a PE • The business of development and global deals
decision support and risk management; and (d)
in India, and accordingly taxed profits attributable to carried out through activities in India cannot be
professional services. eFunds International India (P.)
PE for all the years under consideration. The TO also considered to be preparatory and auxiliary in
Ltd. (“eFunds India”), a company carrying on business
levied interest under section 234B of the Act. nature.Furthermore, Form 10-K (prescribed form to
in India, was rendering following services pursuant to
be filed with SEC) also indicated that the business of
agreement entered by eFunds USA and IT Solution
On appeal, the CIT(A) upheld the TO's line of action in eFunds India was inextricably linked to the business
USA with eFunds India on principal to principal basis :
holding that eFunds USA and IT Solution USA had a of eFunds USA and IT Solution USA.
(a) call center services; (b) shared services relating to
PE in India and its profits were subject to tax. • There is no requirement for the place of business to
finance and data entry; and (c) software development
be owned, rented or otherwise under the possession
services. eFunds India received remuneration at cost
Tribunal Ruling or control of the enterprise. The place should be
plus 16 percent for these services and was assessed to
fixed in the context of business being carried out.
tax in India in respect of the remuneration for services
• The MAP resolution was to be viewed as an
rendered. The transactions between eFunds India and The Tribunal observed and held that:
application of the tax treaty to an e-commerce
eFunds USA and IT Solution India were claimed to be
Existence of Business Connection in India environment, where literal interpretation of article 5
g other than for AY 2005-06.
at arm's length 5 eFunds
may not lleadd to a correct representation
i off the
h
India had an international division consisting of
• Under the agreement, both eFunds USA/IT Solution taxing rights of the two jurisdictions.
President’s office and a sales team for overseeing
India and eFunds India were under a legal • The assessees had not been able to point out any
operations of eFunds group entities globally and
obligation to provide services to clients. change in the business model as compared to that
undertaking marketing efforts for affiliates of eFunds
existing
g during g the AYs covered under the MAP
USA The overall reporting of the President’s
USA. President s office
• eFunds India did not have requisite material assets resolution.
was to eFunds USA.
to perform its functions independently nor did it • Therefore, a PE existed under article 5(1) of the tax
bear any significant risk. treaty in respect of the back office operations and
PwC 13
software development services being carried out by Unless specifically provided in a tax treaty, a itself. To support this position, reliance was placed on
the subsidiary. restriction provided under the Act cannot be the India-France tax treaty. Clause 3(a) of Article 7 of
• eFunds India represented a PE of the eFunds USA enforced in calculating the profits of a PE h India-France
the di tax treaty provides
id that
h expenditure
di
and IT Solution USA under paragraphs 5(1) and is to be allowed subject to the limitation of the taxation
Facts
5(2)(i) of the tax treaty. laws of the contracting states. However, no such
The assessee was a Mauritius-based company with a restriction has been incorporated into the India-
Attribution of p
profits PE in India. During the relevant year, while computing y As a result, the restriction
Mauritius tax treaty.
the profit of the PE, it had claimed expenses incurred provided by section 37(2) of the Act cannot be
eFunds India did not bear the entire risk of business . in relation to traveling and entertainment. The TO enforced. Accordingly, the CIT(A)’s order was
The remuneration paid to eFunds India , though held rejected the assessee’s claim on the basis of a confirmed.
to be at arm’s length in the transfer pricing study restriction provided under section 37(2) of the Act (the
Note: The issue of whether the charging of higher
conducted for eFunds India
India, would not cover all the section was omitted vide the Finance Act
Act, 1997) and
rates of tax to foreign companies as compared to
risks accruing to eFunds USA and IT Solution USA Rule 6D of the Income-tax Rules, 1962 [omitted vide
Indian companies would be hit by the non-
through their PE. Therefore, it would not extinguish the Income-tax (Thirty Second Amendment) Rules,
discriminatory clause, was also discussed in the
the assessment of further income in the hands of 1999]. The provisions included a restriction on the
judgement, wherein it was held that after the insertion
eFunds USA and IT Solution USA. allowance of entertainment and traveling expenditure
of Explanation 1 to section 90 by the Finance Act,
Act
above a specified limit. On appeal, the CIT(A) deleted
2001 with retrospective effect from 1 April, 1962, the
The Tribunal provided a method for estimating the the additions.
charging of higher rates of tax to foreign companies
profits attributable to the PE .
Assessee’s contentions would not be hit by the non-discriminatory clause.
Interest p
The assessee contended that the restrictions imposed JCIT v. State Bank off Mauritius Ltd. [2009-TIOL-712-
[ 9 7
by the Act could not be applied and the allowability of ITAT-MUM]
Since the return of income was not filed and the expenses, whether used for the purpose of business or
income assessed in the hands of eFunds USA and IT not, was not restricted by Article 7(3) of the India-
Solution USA was not subject to withholding tax, Mauritius tax treaty.
i
interest under
d section
i 234B B was leviable.
l i bl Tribunal’s Observations and Ruling
eFunds Corporation v. ACIT [2010-TII-165-ITAT- The Tribunal observed that Article 7(3) of the India-
DEL-INTL] Mauritius tax treaty prescribed the methodology for
computing the business profit, in terms of which
expenditure incurred for the purposes of the business
of the PE would be allowable. Hence, the restriction
provided in the Act could not be applied; however, any
restriction required was to be provided in the Treaty
PwC 14
Hypothetical tax is a deductible expense even if actual tax in the host

country is less
Facts
The assessee was employed in the USA and was deputed to work in an Indian
company. While fixing salary for the deputation, the assessee was assured that he
would receive the net amount of salaryy which he was g getting
g in the USA. Accordingly,
g y,
the hypothetical taxes (“hypo tax”), according to US tax rates, were deducted from
the salary of the assessee and the employer was to bear the incremental taxes in
India. During assignment in India, the taxes payable in India were less than the hypo
taxes deducted in the US. Accordingly, the employer saved the amount represented
b th
by the diff
difference b
between
t th
the h
hypo ttaxes and
d actual
t l IIndian
di ttaxes. Whil
While fili
filing th
the
Indian tax return, the assessee claimed a deduction of the hypo taxes. This claim was
rejected by the TO. The Tribunal, however, allowed it and concluded that the income
of the assessee included only net salary and the Indian taxes borne by the employer.
Accordingly, the hypo taxes should have been deducted while computing the total
income of the assessee.
HC Ruling
The HC upheld the Tribunal’s order, wherein it was held that the hypo taxes, which
were deducted from the salary of the assessee, never accrued in India. The HC also
held that the issue of taking credit of the Indian taxes in the USA was not relevant.
The income arising in India was the salary net of hypo taxes plus incremental tax
liability arising out of the Indian assignment. Since the hypo taxes had never accrued
to the assessee, these were not to be included in the total income of the assessee.
H
Hence, the
h HC h held
ld that
h h hypo taxes would
ld b
be d
deducted
d d ffrom the
h salary
l off an
employee even if the actual taxes paid in India were less than the hypo taxes.
CIT v. Dr. Percy Batlivala [2010-TIOL-175-HC-Del-IT]
PwC 15
with Microsoft Operations Pte Ltd. (“MO”), • In the case of Gracemac, for A.Y. 1999-2000 to A.Y.
Singapore, under which MO was granted a non- 2004-05, the TO held that Gracemac was receiving
a royalty out of licensing Microsoft software
exclusive license to manufacture Microsoft software
products in India, and accordingly, taxed the
products in Singapore and to distribute the software
payments made by MO to the Gracemac, (these
products so manufactured.
payments ranged from 35% to 40% of the net sales
• MO, in turn, entered into a non-exclusive consideration received by MRSC from Indian
di ib i and
distribution d iinter-company services
i agreement distributors in India),
India) as royalty under the Act and
with Microsoft Regional Sales Corporation also under the tax treaty. On appeal, the CIT(A)
enhanced the assessment by treating the entire
(“MRSC”) to sell the copies of Microsoft software
consideration received by MRSC from Indian
which were reproduced/manufactured by MO. MO
distributors as royalty in the hands of Gracemac, on
p to MRSC in Singapore.
sold all the software copies g p
the grounds that MRSC and MO were merely legal
MSRC entered into agreements with various facades.
distributors in India.
• MO paid royalty to Gracemac for each Microsoft Tribunal Ruling

Licensing revenue earned from Indian retail software copy, which ranged from 35% to 40%
distributors of Microsoft software products is of net selling price received by MRSC from the • A copyright subsists in a computer program and it is
taxable as "royalty" distributors in the Indian Territory. also a literary as well as a scientific work. A
computer program is also a patent, invention or a
• MS Corp, being the registered owner of the process. As end-users have made payment for
Facts intellectual property in Microsoft software products, transfer of rights (including the granting of a
entered into an ‘End User License Agreement’ license) in respect of copyright, patent, invention,
• Until 31 December, 1998, Microsoft Corporation
(“EULA”) with the end users in India. process, literary or scientific work, the payment
(“MS Corp”) had entered into agreements with would be in the nature of royalty.
• For A.Y. 1996-97, the TO taxed the payment
various Indian distributors for sale of “off the received by the MS Corp from Indian distributors as • The definition of the term 'royalty' appearing in
shelf”// “shrink
shelf shrink-wrapped
wrapped” Microsoft software on ‘
‘royalty’
l ’ under
d theh A
Act and
d the
h tax treaty, which
hi h was clause (v) of Explanation 2 to section 9(1)(vi) of the
principal-to-principal basis. upheld by the CIT(A). Act is inclusive and wide enough to include other
works such as dramatic or musical work, computer
• With effect from 1 January, 1999, MS Corp granted • In the case of MRSC, for A.Y. 1999-2000 to A.Y. programs, cinematograph film, etc.
an exclusive license to its subsidiary, Gracemac 2001-02, the TO held that payments had been
• As regards Article 12(3) of the tax treaty, the
Corporation (“Gracemac”)
( Gracemac ) to manufacture and received for the licensing of Microsoft software
definition of the term ‘royalty’ is identical to that in
license Microsoft retail software products. products, which amounted to the granting of a right
section 9(1)(vi) of the Act and there is no conflict.
Gracemac in turn entered into a license agreement in intellectual property. On appeal, the CIT(A) Under both the cases, royalty is deemed to arise in
confirmed the order of the TO. the state in which the payer is situated.
PwC 16
• The term ‘copyrighted article’ is nowhere used in the • In other years, as regards Gracemac, the argument one for the manufacture of diesel fuel injection
Act or in the tax treaty. The expression ‘copyrighted that since EULA had been signed between the equipment and the second a technical collaboration
article’ originated in the US Regulations and then end-users
d and
d Mi
Microsoft
f CCorp, no li
license was agreement
agreement.
found its way into the OECD commentary. There is granted by Gracemac, and consequently, royalty • The TO observed that there had been a change in
no need for importing the expression ‘copyrighted payment were not chargeable to tax in the hands of the terms of the technical collaboration agreement
Gracemac was not acceptable because the between the assessee and MICO and that no royalty
article’ from OECD Commentary or US guidelines
agreements between Gracemac and MO, MO and was ppayable
y byy MICO to the assessee on pproducts
o thee pu
for purpose
pose oof interpretation
e p ea o o of term
e ‘royalty’.
oya y
MSRC and,
MSRC; d MSRC andd IIndian
di didistributors
ib were a sold to the assessee.
• The judgement of the SC in the case of Tata ‘camouflage’.
Consultancy Services v. State of Andhra Pradesh • Hence, the TO taxed 5% of the proceeds of the
• Since the end-users had made payment in respect of
exported products, as royalty income under section
(2004-TIOL-87-SC-CT-LB) and the Special Bench the granting of license in copyright in computer
5(2) and section 9(1)(iv) of the Act.
decision in the case of Motorola Inc. v. DCIT (2005- program, the payment made by the end-users as
TII-10-ITAT-DEL-SB-INTL) were not applicable in consideration would be taxable in the hands of • The CIT(A) upheld the TO’s order.
the present context. Gracemac.
Assessee’s contentions
• As regards MRSC, the income ought to have been
• Microsoft products are patented in the USA. • The TO had failed to consider that know-how
assessed as business income under section 9(1)(i) of
Therefore, the payment made by the end users as a g to the assessee and therefore, MICO was
belonged
the Act and not as ‘royalty’
royalty . However,
However as the entire
consideration for the ‘use’ or the ‘right to use’ of not paying a royalty to the assessee for the use of its
sum paid by the end-users to the distributors had
such patents would be in the nature of royalty. been held to be royalty for grant of rights, and know-how in the manufacture of the contract
assessed in the hands of Gracemac. MSRC cannot products sold exclusively to the assessee.
• A computer program is a process when it executes
instructions lying in it in passive state. Therefore, be taxed again on the same sum which had been • The royalty income calculated by the TO was
assessed in the hands of Gracemac.
Gracemac notional income,
income and hence,
hence wasas not covered
co ered under
any consideration made for the use of process would
amount to royalty. M/s Gracemac Corporation v. ADIT [2010-TII-141 section 5(2) read with section 9(1)(vi) of the Act.
ITAT-DEL-INTL] Revenue’s contentions
• MS Corp had itself filed suits in Indian Courts
The tax department cannot impute notional
alleging copyright infringement when MICO had raised invoices against the assessee on
royalty income for a foreign company
pirated/unlicensed
i t d/ li d software
ft are used,
d hhence it contract products which
hich did not include any
an value
alue for
transferring the ownership of know-how to an
cannot ‘blow hot and cold’ in the same breath on the the royalty. If the same products had been sold to
Indian collaborator in respect of sales made to
same issue. other customers the amount would have included
itself
royalty which would have suffered withholding tax.
• Payment received by MS Corp (A.Y. 1996-97) from Facts Since the invoices raised by MICO on the assessee had
end–users
end users through distributors in respect of sale of • Robert
R b Bosch
B h GmbH
G bH ((the
h ““assessee”),
”) a fforeign
i alread been reduced
already red ced bby the value
al e of the ro
royalty,
alt the
computer software was taxable as royalty. company, had entered into two separate royalty was deemed to have been paid to the assessee
collaboration agreements with Motor Industries by MICO.
Company Ltd. (“MICO”), the Indian collaborator,
PwC 17
Tribunal Ruling providing software solutions, applications and exclusive rights had been transferred to the end-
services. The licensed software products were user or reseller.
The effect of the earlier transactions was that the
royalty became income in the hands of the assessee, marketed, through a distribution channel involving
- End-user was allowed to have access to and make
which was liable to be taxed in India. On the other independent third-party resellers (“resellers”). The
use of the licensed software products. Non-
hand, the royalty had been loaded in the sales invoice resellers were authorised to market products to the
exclusive and non-transferable licences enabling
raised by MICO and thus became an additional customers (“end-users”). The resellers placed a back-
the use of a copyrighted product could not be
purchase cost of the assessee affecting
p g the p
profit and to-back
to back order on the applicant after collecting a
loss account of the assessee in its home country. Thus, regarded as conferring any or all rights engrained
purchase order (“PO”) from the end-user. The
the assessee had arranged its affairs in such a way that in a copyright.
applicant, reseller and the end-user entered into a
the receipt of royalty was eliminated and the cost of tripartite agreement, the EULA, for the product to be - Copying, reproduction or storage of the material
purchases was reduced. supplied by the applicant. was only incidental to the facility extended to the
The
h charging
h i off a royalty l to MICO ffor the
h products
d customer to makek use off the
h copyrighted
i h d product.
d
supplied to the assessee, and this amount being added Issue The exclusive right to prevent copying or
back to the invoice by MICO, had a nil net result. reproduction of work was not passed to end-user.
The applicant sought an advance ruling from the AAR
Hence, the Tribunal held that royalty could not be - The customisation or adaptation of a computer
on treatment of payment received from the resellers
charged
h d when
h ththe k
know-how
h ffor th
the manufacture
f t off program would not constitute “infringement”
infringement in
under the India-Japan tax treaty.
the products sold was supplied by the assessee itself. terms of section 52(aa) of the CA. Hence, there
was no transfer or licensing of copyrights.
Conclusion AAR Ruling
- The reproduction and adaptation envisaged in
The Tribunal had held that it was not appropriate for • The payment would not amount to royalty since (a)
section 14(a)(i) and (vi) of the CA
CA, could mean
the assessee to earn income in the form of royalty no rights in relation to copyright had been
reproduction and adaptation for the purpose of
which was instantaneously returned to the assessee as transferred, nor any right of using the copyright had
commercial exploitation.
trading / manufacturing expenditure. been conferred on the licencee; and (b) the payment
was not for the use of or right to use a “process” or - The phrase “including the granting of a licence”
Robert Bosch GmbH v. ACIT [2010-TII-149-ITAT-
the transfer of rights in respect thereof. would
ou d ta
takee its
ts co
colour
ou from
o the
t e preceding
p eced g
BANG-INTL]
expression “transfer of rights in respect of
• The consideration could not be regarded as payment
copyright”. Hence, a non-exclusive licence
for transfer of all or any rights in respect of a
Payment for the supply of software products is permitting use for in-house purposes was not
copyright in terms of Article 12 of India Japan tax
not taxable as royalty covered in the definition of royalty.
treatyy due to the followingg reasons:
Facts - The analysis and reasoning in the OECD
- The ownership of copyright carried with it the
M/s Dassault Systems K.K. (“the applicant”), a Commentary on Article 12 was acceptable.
rights mentioned in section 14 of the Indian
Japanese company, was engaged in the business of Hence, no rights in relation to copyright had
Copyright Act, 1957 (“CA”). None of these
PwC 18
been transferred, and therefore, the payment cannot (“RC”), which involved RC supplying hardware knowledge and experience with the applicant’s
be regarded as royalty. (consoles and equipment) and software (customer off- personnel at the time of integration with the
the-shelf software, Raytheon’s ATC automatic existing system, the site acceptance test, the
• The consideration cannot be regarded as payment
for the use of or right to use a “process” or the application software), and providing services in technical manuals and data furnished for putting
transfer of rights in respect thereof, on account of connection with the installation of the software. the system to effective use, RC was making available
the following reasons: to the applicant its technical knowledge and skills.
pp
Under the contract, the applicant was ggranted a non- y , the recipient
In the ultimate analysis, p of the service
- Use off process contained
U i d iin software
f or transferable, non-exclusive royalty-free licence to use is enabled to apply the technology.
acquisition of rights in process was not the real the software at the New Delhi airport only. Certain
nature and substance of the transaction. support activities relating to installation and site • The Contract also involved the transfer of a
- By making use of or having access to the inspection tests were to be rendered in India. The technical plan, in devising and activating the
computer
co pu e programs
p og a s eembedded
bedded in thee so
software,
a e, it applicant
pp approached
pp AAR for an advance ruling g upgraded automation system.
could not be said that the customer was using the regarding taxes to be withheld on the payment to RC.
• Though, the applicant had not been provided with
process that had gone into the end-product or
the technology for developing the software, the
had acquired any rights in relation to any process Issue
substance of the transaction is the rendering of
as such.
Whether the p payment
y received byy RC for the supply
pp y of technical and consultancy services which make
- The process contemplated
Th l d iin the
h ddefinition
fi i i off hardware and software and the provision of services in available to the applicant the technical knowledge,
“royalty” referred to knowhow. connection with the installation of the software was experience and skills possessed by RC in the field
- Right of using the process involved in the liable to tax in India, and accordingly, whether the and the provision of the software system is only part
software had not been conveyed to the end-user. applicant was liable to withholding tax in India. of the exercise.
- IIt cannot b
be said
id that
h ffollowing
ll i a series
i off • Therefore,
Th f the
th delivery
d li off the
th software
ft and
d
AAR Ruling
instructions to make use of programs contained specification of the cost of the software cannot be
in software amounted to the use of a process. viewed in isolation and the consideration towards
• RC was bound to provide the necessary information the supply of software and the installation services
M/s. Dassault Systems K.K., In re [2010-TIOL-02- to operate, maintain and repair the system delivered would fall within the scope of Article 12(4)(b) of the
ARA-IT]
ARA IT] under the contract. India-USA tax treatyy to constitute FIS.
• The software as such had no value to the applicant • The consideration towards the supply of hardware
Taxability of consideration received for the would not be taxable in India since the title and risk
unless RC in close collaboration with the applicant
supply of hardware, software and installation in property were passed to the applicant outside
made the system functional at all times, even
services India.
without the presence of RC’s technicians.
F
Facts Airports Authority of India, In re [2010-TIOL-19-
• By means of various technical services provided by
ARA-IT]
The Airports Authority of India (the “applicant”) had RC’s personnel and the sharing of their technical
entered into a contract with Raytheon Company, USA
PwC 19
The TO, rejecting the assessee’s contentions, held that directly applicable in favour of the assessee and the
BWIPL constituted a business connection, as well as a department had not been able to successfully show
PE, of the assessee, under Article 5(4)(a) and 5(4)(c) of to why they should not be followed.
the India-UK tax treaty, and estimated 20% of the • Accordingly, the assessee was found to be justified
total advertisement revenue as profits attributable to and its appeal upheld.
the Indian PE.
BBC Worldwide Limited v. DDIT [2010] 37 SOT 253
On appeal,l the
h CIT(A)
( ) upheld
h ld the
h order
d off the
h TO, bbut (Del)
reduced the estimated attributable profits to 10%,
placing reliance on the CBDT Circular 742 dated 2 SC annuls HC’s directions on technical
May, 1996. transfer pricing issues relating to marketing
T ib
Tribunal
l Ruling
R li intangibles
No further attribution of profits can be made if The Tribunal held that: Facts
a dependent agent is paid arm’s length • It did not make a difference if the order of the The assessee was engaged in the business of
commission Transfer Pricing Officer (“TPO”) was that the manufacturing and selling cars as well as trading in
subsidiary was a dependent agent.
agent The TPO had spares andd components off vehicles.
hi l IIt entered d iinto a
Facts accepted that the transaction was made at an arm’s license agreement with an associated enterprise
The assessee, an English company, was operating as length price. (“AE”) for the use of licensed information and licensed
an international consumer media company in the trademarks for the manufacture and sale of the
• The department had not been able to establish that
areas of television, publishing, program licensing, etc. products and p
p parts in specified
p territories. The
BWIPL was a mere façade.
The assessee had appointed BBC Worldwide (India) assessee paid composite royalty for the licensed
• As the assessee had filed country accounts in India
Pvt. Ltd. (“BWIPL”), its indirect subsidiary, as its trademark as well as for the technology license. During
authorised agent in India under an Airtime Sales wherein the total revenue and expenses of the transfer pricing audit proceedings, a show cause notice
Agreement (“ASA”) to solicit orders for the sale of assessee were allocated to Indian activity, the CBDT was issued by the TPO to the assessee, wherein the
advertising airtime on the channel at the rates and on Circular 74
742 did not apply.
pp y revenue proposed that there had been a ‘deemed
deemed
the terms and conditions provided by the assessee. transfer’ of the brand name for which the assessee
• The decisions of the SC in the case of DIT v. Morgan
BWIPL was remunerated with a marketing ought to have received an arm’s length consideration
Stanley and Company Inc. [2007] 292 ITR 416 (SC)
commission of 15% of advertisement revenue received
and of the Bombay HC in the case of Set Satellite based on the fair market value of the brand and
by the assessee from the Indian customers.
(Singapore) Pte. Ltd. [2008] 307 ITR 205 (Bom), proceeded to propose an adjustment. Later, the
The assessee filed its revised tax return in India wherein it was held that if the correct arm’s length revenue abandoned this approach and proposed an
declaring only royalty income and claiming the non- price had been applied and paid, nothing further adjustment by disallowing the royalty paid for the use
taxability of business income, by way of notes to the of trademarks and also the non-routine advertisement,
was left to be taxed in the hands of the foreign
return, as it did not have a PE in India. marketing and promotion expenses incurred in
enterprise, were considered. These decisions were
PwC 20
promoting the brand name, through the issuance of a Against the order passed by the HC, the assessee scope of section 40A(2) of the Act. The revenue’s
fresh show-cause notice. Aggrieved, the assessee filed approached the SC. appeal to the HC was dismissed. The revenue filed a
a writ petition before the HC against the show cause special leave petition before the SC.
SC Ruling
notice issued by the TPO. The SC held that since the entire exercise was revenue-
The SC observed that the HC, while adjudicating the
HC Ruling neutral and GSK Asia and GSKCH were not related
writ petition, had made certain observations on the
parties in terms of section 40A of the Act, no
The HC referred the case back to the TPO with the g g
merits of the case through giving
g directions to the
i t f
interference was called
ll d ffor and
d th
the special
i l lleave
following observations: TPO, thus virtually concluding the matter on its
petition filed by the revenue was dismissed.
merits. The SC directed the TPO to proceed in
• Appropriate payment should have been made on
accordance with the law, “uninfluenced” by the Furthermore, the SC stated that the main issue was
account of the benefit derived by the foreign AE in
observations / directions given by the HC in the whether transfer pricing regulations should be limited
the form of marketing intangibles obtained from the
i
impugned d order,
d on merits.
it to cross-border
cross border transactions or whether they should be
mandatory use of intangibles. However, if the
extended to domestic transactions. Domestic
agreement between the AE for the use of brand Maruti Suzuki India Ltd. v. ADIT [2010-TII-01-SC-
transactions would ordinarily be revenue-neutral in
name/logo was discretionary, no payment had to be LB-TP]
nature, except in the following circumstances, having
made by the foreign entity. The HC arrived at such a
tax arbitrage potential,
conclusion based on the use of the term “shall”
shall in Transfer pricing provisions for domestic
the license agreement, not considering that even transactions • If profit is shifted to a loss-making concern.
third parties use the term “shall” in the context of • If there are different tax rates applicable to two
GlaxoSmithKline Asia Private Ltd. (“GSK Asia”), an
affixing trademarks under license agreements, related units.
Indian private company, had entered into an
without any requirement whatsoever to pay
g
arrangement with GlaxoSmithKline Consumer
compensation to the licensee. Therefore,
Th f the
th SC hheld
ld th
thatt if ttransfer
f pricing
i i
Healthcare Limited (“GSKCH”), an Indian widely held
regulations were to be applied to domestic
• Where the domestic AE mandatorily used the public company, to receive administrative services.
transactions between related parties, then specific
foreign brand name and incurred more advertising GSK Asia reimbursed the costs incurred by GSKCH in
amendments should be made in the Act such as:
and marketing expenses than what an independent providing such services with a mark-up of 5% (referred
comparablebl entity
i would
ld incur,
i such
h additional
ddi i l t as a ““cross charge”).
to h ”) Th
The TO hheld
ld th
thatt th
the paymentt • Sections 40A(2) and 80IA(10) of the Act would need
expenses could be said to be incurred for the benefit of a cross charge only to the extent of 7% of net sales to be amended empowering the TO to make
of the foreign trademark owner in the form of brand was justified and he disallowed the balance amount. adjustments to the income declared by the assessee
building and increased awareness of its brand in the The disallowance was confirmed by the CIT(A). having regard to the fair market value of the
domestic market, requiring arm’s length transactions, by using any of the generally accepted
However, the Tribunal held that the TO had no power
However
compensation by the foreign entity. methods of determining an arm's length price.
to disallow any expenditure as excessive or
unreasonable, unless the case was covered within the
PwC 21
• Consideration would also have to be given as to price of the product was independent of its end use. therefore regarded the case as a low risk case.
whether the law should be amended to make it Furthermore, there was no evidence to show that the Furthermore, placing reliance on the decision of the
compulsory for the taxpayer to maintain books of assessee and its AE had an agreement for a discount Bangalore Tribunal in the case of Phillips Software v.
account and other documents on the lines on the basis of quantity / bulk purchase. The TO held ACIT [2008-TII-09-ITAT-Bang-TP], the CIT(A) held
prescribed under Rule 10D of the Income-tax Rules that the assessee had not followed the CUP method that while the motive of tax avoidance need not be
in respect of such domestic transactions, and properly and had failed to furnish comparable prices. shown at the time of initiating transfer pricing
whether the taxpayer should obtain an audit report However, the TO allowed a 5% industry discount provisions, it did have to be shown at the time of
from a Chartered Accountant in this regard. stating that this was a ‘general practice in the assessment / audit. It was also stated that the TO had
industry’. to demonstrate that the assessee manipulated prices to
The suggestions made were intended to reduce
shift profits outside India. Accordingly, it was held
litigation by making specific amendments to extend On appeal before the CIT(A), the assessee contended
that the transactions were at arm’s length and no
p of the transfer p
the scope pricing
g regulations
g to that the AE was set uppp primarilyy for two reasons. The
adjustment
dj was required.
i d
domestic transactions between related parties. first was the comfort of customers, and the second was
the warranty on the products, which had a sensitive Aggrieved by the order of the CIT(A), the revenue
CIT v. GlaxoSmithKline Asia Private Ltd. [2010-TII-
and important application. The variation in selling appealed to the Tribunal.
02-SC-LB-TP]
price of products sold to the AE vis-à-vis non-AEs was
Tribunal Ruling
mainly due to quantity differences,
differences geographical
Differences on account of volume, geography
differences, customer profile, and the survival of the On appeal, the Tribunal held that factors like quantity
and customer profile impact the
assessee. It also highlighted the paradox in ALP differences, geographical differences, customer profile
determination of arm’s length price, and so do
computation, and losses suffered by AE. and the survival of the assessee had been rightly
other commercial and business realities
considered by the CIT(A). It also highlighted the
CIT(A) Ruling
paradox in ALP computation, and said that losses
Facts
The CIT(A) observed that the assessee was not a suffered by the AE were rightly considered by the
The assessee was engaged in the business of multinational but was a small manufacturer and CIT(A), and the order of the CIT(A) was to be upheld.
processing and exporting chemicals, and made the exporter, which had established an AE under the Accordingly, the Tribunal opined that the transactions
majority of its international sales transactions with its p
commercial compulsion of offering g a long-term
g of the assessee with its AE were at arm’s length
g and
AE, Chemical Link LLC, USA. The assessee warranty to its customers. The CIT(A) reiterated that that no adjustment was required.
determined the arm’s length price (“ALP”) using the the basic intent of a separate code on transfer pricing
ACIT v. Dufon Laboratories [2010] 39 SOT 59 (Mum)
Comparable Uncontrolled Price (“CUP”) Method. The was anti-tax avoidance, and that it had been
assessee explained that the variation in selling price of established, in order to avoid the cross border shifting
products sold to AE vis-à-vis
vis à vis non-AEs
non AEs was on account off profits
fit from
f India
I di tot offshore
ff h jjurisdictions
i di ti b
by
of quantity discounts and the difference in the end- multinational companies. The CIT(A) held that there
user of the products. The TO observed that the sale could not be any saving or avoidance of tax by the
assessee by shifting profits outside India. The CIT(A)
PwC 22
purchase of goods. Accordingly, the payer did not have payer was fairly certain that a payment was not
any obligation to withhold tax under section 195(1) of chargeable to tax under the Act, it could make its own
the Act since the payment did not constitute income determination as to whether tax was to be withheld
for the purpose of withholding tax. under section 195(1) of the Act and if so, what the
amount should be. The SC overruled the HC’s ruling
HC Ruling that the moment there was a remittance to a non-
resident there was an obligation to withhold tax. It
Before
B f th
the HC
HC, the
th revenue raised
i d a new plea
l th
thatt th
the
remanded the matter back to the HC for
payer was bound to withhold tax under section 195(1)
determination of whether the amount paid by the
of the Act. It was not open to the payer to contend that
payer to a foreign software supplier was royalty, and
the payment was not the income of the recipient as
therefore, whether there was any requirement to
they had not obtained a dispensation under section
withhold
i hh ld tax therefrom.
h f
195(2) of the Act from the TO. The HC held that a
resident payer making any payment to a non-resident
GE India Technology Centre Pvt. Ltd. v. CIT [2010-
which was in the nature of income per se, would
TII-07-SC-INTL]
Payments to a non-resident will be subject to mandatorily have to withhold tax therefrom under
section 195(1) of the Act
Act. The payer had not taken any
withholding of tax if it is chargeable to tax in No authorised dealer is liable to withhold tax
India steps under section 195(2) of the Act. The HC did not
on the remittance of sales proceeds,
give any ruling on whether payment for the import of
representing short-term capital gains, to a
Facts shrink-wrapped software constituted a royalty.
non-resident
The assessee company made a payment to the non- non li
SC Ruling
resident for the purchase of shrink-wrapped software Facts
The SC held that section 195(1) of the Act imposed a
packages without withholding tax under section 195(1) The assessee, a banking company, was engaged in the
of the Act, on the ground that the payment did not statutory obligation on any person responsible for
portfolio investment business, under the Portfolio
constitute income chargeable to tax in India. Neither paying to a non-resident, interest (other than interest
Investment Scheme, for non-resident clients.
on securities)
iti ) or any other
th sum chargeable
h bl under
d th
the
any application was made nor any dispensation
Act, to deduct income tax at the rates in force. The The assessee remitted funds due to non-residents
obtained by the payer under section 195(2) of the Act.
most important expression in section 195(1) of the Act based in the UAE obtained from the sale of Indian
The TO treated the payments as royalty and
consisted of the words “chargeable under the Government securities (Treasury Bills). While
accordingly held the assessee to be in default under
provisions of the Act”. The application of section remitting funds, it did not withhold tax on the capital
section 201(1) of the Act.
Act The CIT(A) upheld the order
195(2) of the Act pre-supposed that the payer was not gains, based on a certificate issued by a Chartered
of the TO. The Tribunal held that shrink-wrapped
in doubt that the payment was per se chargeable to tax Accountant, on the ground that the gains were exempt
readymade software packages embedded in a medium
in the hands of the non-resident. Thus, where the from tax under Article 13(3) of the India-UAE tax
constituted goods and that the payment was for the
treaty.
PwC 23
The TO held that the assessee was liable to withhold the assessee was not liable to withhold tax from the
tax on the capital gains remitted to its customers in amount credited to the NRE account.
the UAE, and therefore, interest under section 201(1A)
• Even though the tax law in the UAE did not levy tax
of the Act would be leviable for the non-withholding of
on capital gains on non-residents residing there, the
tax.
benefits of the India-UAE treaty could not be denied
On appeal, the CIT(A) invoked section 204(iii) of the and the assessee was not liable to withhold tax from
Act and
dhheld
ld that
h the
h assessee was ‘the
‘ h person the
h amount credited
di d to the
h NRE accounts off non-
responsible for paying’ a sum chargeable to tax. residents of the UAE. While holding as such,
However, the CIT(A), after referring to the decision in reliance was placed on the decision in the case of
the case of ADIT v. Green Emirate Shipping and Green Emirate Shipping and Travels (above) and on
Travels [2006] 286 ITR ((A.T.)) 60,, held that the capital
p a few other decisions.
gains were not taxable in India and the assessee was
DDIT v. The Hongkong & Shanghai Banking
not obliged to withhold tax.
Corporation Limited [2010-TII-161-ITAT-MUM-
INTL]
Tribunal Ruling
The Tribunal observed and held that:
• In terms of the language of clause (iia) of section

204 of the Act, the liability to withhold tax arose
only where long-term capital gains were earned.
• Clause (iii) existed in section 204 of the Act right

from the beginning. Clause (iia) was inserted into
section 204 of the Act with effect from 1 June, 1986.
As explained by Circular No. 461 [1986] 161 ITR
(St ) 117, th
(St.) the clause
l h
had
dbbeen iinserted
t d tto avoid
id delay
d l
and inconvenience in cases where a non-resident
proposed to remit the sales proceeds of foreign
exchange assets.
• A special provision in clause (iia) relating to

authorised dealers overrode the general provision
made in clause (iii) relating to the payer. Therefore,
PwC 24
Revenue’s contentions HC Ruling
• The revenue relied on the provisions of section

The HC relied on the SC’s judgement in the case of
32(3) of the Unit Trust of India Act, 1963 (the “UTI
Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 (SC) and
Act”) to treat the loss as speculative loss. According
held that the Explanation to section 73(1) did not
to the relevant provisions, any distribution of
apply and the loss could not be regarded as speculative
income by UTI was to be deemed to be dividend in
in nature. The HC also held that a transaction,, does
the
h hhands
d off unit
i h
holders
ld and
d UTI was to b be d
deemedd
not become a colourable device merely because it has
to be a company.
been entered into with the motive of avoiding tax.
• The revenue also relied on the SC’s judgement in the Furthermore, the HC held that not every attempt at
case of McDowell and Co. Ltd. v. CTO [1985] 154 tax planning could be stretched to be regarded as
Transactions permissible by law, though ITR 148 (SC),
(SC) wherein
h i it was held
h ld th
thatt even if th
the ill iti t nor could
illegitimate, ld every ttransaction
ti or
entered into with the motive of reducing tax transaction were genuine, and had been entered arrangement, if perfectly permissible under law and
liability, should be regarded as bona fide into with the intention of tax avoidance, it would having the effect of reducing the tax burden of the
transactions still constitute a colourable device. assessee, be looked upon with disfavour.
Accordingly the HC allowed the assessee

Accordingly, assessee’ss appeal.
appeal
Facts Assessee’s contentions
Porrits and Spencer (Asia) Ltd. v. CIT [2010-TIOL-
• The deeming fiction provided in section 32(3) of the
• The assessee purchased US-64 units of UTI and 230-HC-P&H-IT]
immediately after receiving the dividends sold the UTI Act, created the fiction that UTI could be
units and claimed set-off of short-term capital loss considered as a company. The deeming fiction could
(“STCL”) in its Return of Income. not be
b stretched
h d to make
k a unit off UTI a ‘deemed
d d
share’ to be covered under speculative business
• The TO disallowed the claim of STCL holding that provisions. Hence, the Explanation to section 73(1)
the transactions of the purchase and sale of units of the Act did not apply.
were not genuine transactions and were a device for
• By
B virtue
i t off section
ti 94(
94(7)) off the
th AAct,
t which
hi h was
tax avoidance. Furthermore, the TO held that the
loss on account of the above transactions was inserted by the Finance Act, 2001, with effect from 1
speculative in nature in terms of the provisions of April, 2001, transactions such as this had been
the Explanation to section 73(1) of the Act. The legally acknowledged and recognised. The assessee
CIT(A) and the Tribunal upheld the order of the TO. contended that the losses arising on such
transactions could not be disallowed since the
transaction was not a business transaction, nor
could it be held that the loss was an artificial one
and not actual.
PwC 25
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Tax Glimpses 2010

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Tax Glimpses - 2010

A Newsletter covering noteworthy tax developments

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Plain and grammatical construction Conclusion

Rule 8D – Retrospective v. Prospective

The Rule came into force on 24 March

Applicability of section 14A if Rule 8D is not

For periods to which Rule 8D of the Rules and sub-

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Issue − Gains would be passed on to the ultimate

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

imputation provisions in the Act, the market value

On the issue of the taxation of IRC fees, the Tribunal

This ruling held that the market value could not be

Reliance Communications Infrastructure v. CIT

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

grounds that it had no PE in India under the Tribunal Ruling

CIT(A) Ruling DDIT v. Clough Projects International Pvt. Ltd.

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Hypothetical tax is a deductible expense even if actual tax in the host

CIT v. Dr. Percy Batlivala [2010-TIOL-175-HC-Del-IT]

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

• MO paid royalty to Gracemac for each Microsoft Tribunal Ruling

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

Assessment Business Deduction Capital Gains Permanent Establishment Personal Taxes

Royalty Transfer Pricing Tax Withholding Miscellaneous

The Tribunal observed and held that: