British Gas India (P.) Ltd., In re

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The Tax PublishersAAR No 725 of 2006 2006 TaxPub(DT) 1434 (AAR) : (2006) 287 ITR 0462 : (2006) 206 CTR 0385 : (2006) 157 TAXMAN 0225 British Gas India (P.) Ltd., In re INCOME TAX ACT, 1961 Income - Accrual -Employee received salary from India for employment services rendered to foreign group company Assessee was an Indian company. It lent its two employees to its UK based group company on temporary basis and salary was received from assessee. In addition, they also receive certain allowance from UK Company. As per residential status, they were Non-Resident Indians. The question is whether provisions of article 16(1) of DTAA would be attracted in their cases. Held: Provisions of article 16(1) of DTAA between India and UK would prevail over provision of section 5(2), since they were drawing their salary in respect of employment services being rendered in UK, and thereupon, income shall be taxable in UK and salary received by them in India would also be taxable in UK and if same had been offered for tax in UK as per provisions of DTAA, then it would not taxable in India. Income-tax Act, 1961, Section 5, read with section 90 and article 16 of Double Taxation Avoidance Agreement between India and United Kingdom Decision: In favour of assessee. Case Law Analysis:Union of India v. Azadi Bachao Andolan (2003) 263 ITR 7061, CIT v. P.V.A.L. Kulandagan Chettiar (2004) 267 ITR 6542. INCOME TAX ACT, 1961 Tax deduction at source - Under section 192 -Salary to employees for employment services rendered in foreign group company As per facts stated under heading Income -Accrual of, whether assessee was liable to deduct TDS under section 192(2). *Held:* Assessee shall not deduct tax at source from salary paid to employees in India, provided it was satisfied from the details and particulars furnished under section 191(2) that taxes had been paid on such payments in the U.K. Income-tax Act, 1961, Section 192 Decision: In favour of assessee. Case Law Analysis:Union of India v. Azadi Bachao Andolan (2003) 263 ITR 7061, CIT v. P.V.A.L. Kulandagan Chettiar (2004) 267 ITR 6542. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersAAR No 725 of 2006
2006 TaxPub(DT) 1434 (AAR) : (2006) 287 ITR 0462 : (2006) 206 CTR 0385 : (2006) 157 TAXMAN 0225

British Gas India (P.) Ltd., In re

INCOME TAX ACT, 1961

Income - Accrual -Employee received salary from India for employment services rendered to foreign group company

Assessee was an Indian company. It lent its two employees to its UK based group company on temporary basis and salary was received from assessee. In addition, they also receive certain allowance from UK Company. As per residential status, they were Non-Resident Indians. The question is whether provisions of article 16(1) of DTAA would be attracted in their cases. Held: Provisions of article 16(1) of DTAA between India and UK would prevail over provision of section 5(2), since they were drawing their salary in respect of employment services being rendered in UK, and thereupon, income shall be taxable in UK and salary received by them in India would also be taxable in UK and if same had been offered for tax in UK as per provisions of DTAA, then it would not taxable in India.

Income-tax Act, 1961, Section 5, read with section 90 and article 16 of Double Taxation Avoidance Agreement between India and United Kingdom

Decision: In favour of assessee.

Case Law Analysis:Union of India v. Azadi Bachao Andolan (2003) 263 ITR 7061, CIT v. P.V.A.L. Kulandagan Chettiar (2004) 267 ITR 6542.

INCOME TAX ACT, 1961

Tax deduction at source - Under section 192 -Salary to employees for employment services rendered in foreign group company

As per facts stated under heading Income -Accrual of, whether assessee was liable to deduct TDS under section 192(2). Held: Assessee shall not deduct tax at source from salary paid to employees in India, provided it was satisfied from the details and particulars furnished under section 191(2) that taxes had been paid on such payments in the U.K.

Income-tax Act, 1961, Section 192

Decision: In favour of assessee.

Case Law Analysis:Union of India v. Azadi Bachao Andolan (2003) 263 ITR 7061, CIT v. P.V.A.L. Kulandagan Chettiar (2004) 267 ITR 6542.