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DIRECT TAXES |
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Advance Rulings Paresh P. Shah & Sweta Gandhi |
1. S. 90 – Double Taxation Relief – International Taxation – India-Mauritius – Capital Gains
Applicant is not liable to pay capital gain tax in India in respect of the transfer of shares held in the Indian Company to HSBC, having regard to provisions of the India-Mauritius DTAA.
E. Trade Mauritius Ltd., in Re. (2010) 324 ITR 1 / 190 Taxman 232 (AAR)
2. S. 90 – Double Taxation Relief – International Taxation – Permanent Establishment – Hardware
Except in regard to the payment made to Raytheon for hardware and COTS software that go with hardware, which are not liable to be taxed in India, the payments for other items fall within the scope of Article 12 and therefore, can be taxed in India, irrespective of the fact that Raytheon has no PE in India. The applicant is liable to deduct tax at source on the payment made to Raytheon other than for hardware, the rate of withholding tax is governed by section 115A(1)(b)(BB) which is more beneficial to the tax payer when compared to the rate prescribed in Article 12 of the treaty.
Airports Authority of India, In Re. (2010) 190 Taxman 209 (AAR) (New Delhi)
3. S. 195 – Deduction of tax at source – Non-resident – Double Taxation relief – India & Switzerland – Articles 5 & 7, Income-tax Act
Payments made towards the share of the cost incurred in respect of research and development activities pursuant to cost contribution arrangement is not the payment towards fees for technical services or royalty. Such contribution is not liable to tax in the hands of the co-ordinating agencies.
ABB Limited, (2010) TIOL 94 ARA-IT dated 15-3-2010
4. S. 195 – Deduction of tax at source – Non-resident – Double Taxation relief – India & US – Article 12, Income-tax Act
Basic design services provided by US entity which includes preparation of plan, concept design, design development and other related consultancy services during construction phase are part of architectural services provided by the US entity. Payment received for such services are fees for included services as it involved development and transfer of technical plan and design. The agreement needs to be read having regard to the predominant features of the contract and by taking into account crux and substance of the contract.
Remittance made to the US entity for making payment to consultants directly to the taxpayer represents reimbursement of actual expenses and does not represent income chargeable to tax.
HMS Real Estate (2010) TIOL 17 ARA-IT dated 18-3-2010
5. S. 195 – Deduction of tax at source – Non-resident – Double Taxation relief – India & USA – Article 7, Income-tax Act
Consideration paid by Indian company to American company under assignment agreement was not capital gains but business profits. Since American company did not have PE in India, consideration not chargeable to tax in India. Payer not required to withhold tax under section 195.
Laired Technologies India Pvt. Ltd. (2010) 323 ITR 598 (AAR)