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The Tax Publishers DDIT v Germanischer Lloyd AG-Indian Branch [ITA No. 4906/Mum/2014, dt. 30-3-2016] : 2016 TaxPub(DT) 2287 (Mum-Trib) Sharing of income between non-resident parent and Indian branch *Facts:* Assessee German company in the business of certification of ship and marine related components, had an income sharing of 70:30 with 30% to the Indian branch office. This had arose out of specific role of the Indian office and there was the precedence of the assessees own case of ITAT where such sharing was upheld on facts. Bereft, assessing officer gave it a reading that the entire profits ought to have got taxed in India under article 7 of the Indo-German DTAA the plea was that the billing to non-resident ship owners by the assessee arose in Indian territorial waters thus the sharing of 70/30 was arbitrary or requires review. On appeal Commissioner (Appeals) upheld the earlier decision reversing the order of assessing officer. On further appeal: Held in favour of the assessee that there was no requirement to review the sharing as it was similar on facts of the earlier case. Note: Recently CBDT had brought out a circular of income sharing in a JV will not be assessed as AOP but on respective share basis especially in case of shared consortium operations. The above decision indicates that branch structure is also a feasible way to have an income sharing principle which in deed will be tested under TP provisions.

The Tax Publishers

DDIT v Germanischer Lloyd AG-Indian Branch [ITA No. 4906/Mum/2014, dt. 30-3-2016] : 2016 TaxPub(DT) 2287 (Mum-Trib)

Sharing of income between non-resident parent and Indian branch

Facts:

Assessee German company in the business of certification of ship and marine related components, had an income sharing of 70:30 with 30% to the Indian branch office. This had arose out of specific role of the Indian office and there was the precedence of the assessees own case of ITAT where such sharing was upheld on facts. Bereft, assessing officer gave it a reading that the entire profits ought to have got taxed in India under article 7 of the Indo-German DTAA the plea was that the billing to non-resident ship owners by the assessee arose in Indian territorial waters thus the sharing of 70/30 was arbitrary or requires review. On appeal Commissioner (Appeals) upheld the earlier decision reversing the order of assessing officer. On further appeal:

Held in favour of the assessee that there was no requirement to review the sharing as it was similar on facts of the earlier case.

Note: Recently CBDT had brought out a circular of income sharing in a JV will not be assessed as AOP but on respective share basis especially in case of shared consortium operations. The above decision indicates that branch structure is also a feasible way to have an income sharing principle which in deed will be tested under TP provisions.