| The Tax Publishers2019 TaxPub(DT) 2689 (Mum-Trib) INCOME TAX ACT, 1961
Section 90
As transactions of assessee with its Indian subsidiary, i.e., Celltick India, had been found to be as at an arm's length price, case of Indian subsidiary for the relevant assessment year, therefore, no further profits could be attributed even if Indian subsidiary constituted dependent PE of foreign assessee in India.
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Double taxation relief - Agreement between India and Isreal - Computation of business profits vis-a-vis profit attributable to PE -
Assessee, a foreign company incorporated in Israel, was engaged in developing software and marketing active content for mobile phones all over the world. It earned revenues from providing of its software solutions to an Indian concern, namely, Celltick Mobile Media (India) Pvt. Ltd., which was its 100% subsidiary, for onward distribution to third party customers. In certain cases, assessee also provided software solution to third party customers directly. DRP held that revenues earned by assessee were taxable in India as 'business profits' in terms of article 7 of India-Israel Tax Treaty and the subsidiary, i.e., Celltick India, constituted 'dependent agent PE of assessee in India. Accordingly, AO made attribution of profits to dependent Permanent (PE) of assessee in India.Held: As transactions of assessee with its Indian subsidiary, i.e., Celltick India, had been found to be as at an arm's length price, case of Indian subsidiary for the relevant assessment year, therefore, no further profits could be attributed even if Indian subsidiary constituted dependent PE of foreign assessee in India.
Relied:DIT (International Taxation) v. Morgan Stanley And Company Inc. (2007) 292 ITR 416 (SC) : 2007 TaxPub(DT) 1354 (SC) and DIT (IT) v. NGC Network Asia LLC, (2009) 313 ITR 187 (Bom.) : 2009 TaxPub(DT) 1304 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
INCOME TAX ACT, 1961
Section 234B
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