Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Income Tax Act 1961: Business _income of companies incorporated in US - Taxability of - Permanent establishment (PE) |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | Income Tax Act, 1961: Business _income of companies incorporated in US - Taxability of - Permanent establishment (PE) - The Income Tax Act, in particular s.90 thereof, does not speak of the concept of a PE - This is a creation only of the DTAA - By virtue of Art. 7( 1) of the DTAA, the business income _of companies which are incorporated in the US will be taxable only in the US, unless it is found that they were PEs in India, in which event their business income, to the extent to which it is attributable to such PEs, would be taxable in India - There must exist a fixed place of business in India, which is at the disposal of the US companies, through which they carry on "their own business - ln the instant case, there is no specific finding in the assessment order or the appellate orders that applying the said tests, any fixed place of business was put at the disposal of these companies - No part of the main business and revenue earning activity of the two American companies was carried on through a fixed business place in India which has been put at their disposal - The Indian company only renders support services which enable the assessees in tum to render services to their clients abroad - This outsourcing of work to India would not give rise to a fixed place PE - Insofar as a service PE is concerned, the requirement of Art.5(2)(1) of the DTAA is that an enterprise must furnish services "within India" through employees or other personnel - None of the customers of the assesses are located in India or have received any services in India - Therefore, the assessing officer, CIT (Appeals) and the lTAT essentially adopted a fundamentally erroneous approach in saying that they were contracting with a 100% subsidiary and were outsourcing business to such subsidiary, which resulted in the creation of a PE - Interference wit!! the judgmentally of High Court not called for - Double Taxation Avoidance Agreementof 1990 - Arts.5, 7.Foreign assessee - Burden to prove PE - Held: The burdenof proving the fact that a foreign assessee has a PE in India andmust, therefore, suffer tax from the business generated from suchPE is initially on the Revenue.Permanent establishment (PE) - Meaning of - Distinct typesof PEs - Discussed - Double Taxation Avoidance Agreement of1990 - Art.5. |
Judge | Hon'ble Mr. Justice R.F. Nariman |
Neutral Citation | 2017 INSC 1048 |
Petitioner | Assistant Director Of Income Tax-i, New Delhi |
Respondent | Mis. E-funds It Solution Inc. |
SCR | [2017] 10 S.C.R. 157 |
Judgement Date | 2017-10-24 |
Case Number | 6082 |
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