international taxation digest · case nos. international taxation digest ... case nos. position...

CASE NOS.

Chapter-heads I-5

List of cases digested I-15-I-127

List of cases affirmed/reversed/overruled/approved/disapproved I-129-I-140

List of cases against which SLP Dismissed/Granted bySupreme Court I-141-I-143

ARTICLE 2 : TAXES COVERED

� Tax, connotation of 1-7

ARTICLE 3 : GENERAL DEFINITIONS

� General 8

� Person 9

ARTICLE 4 : RESIDENT

� General 10-19

� Company 20-43

� Firm 44-63

� Hindu undivided family 64-79

� Association of persons 80

� Individual 81-186

ARTICLE 5 : PERMANENT ESTABLISHMENT

� General 187-189

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CASE NOS.

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INTERNATIONAL TAXATION DIGEST

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CASE NOS.

� Agency PE 190-228

� Construction/installation PE 229-256

� Fixed PE, Place of business 257-292

� Liaison office 293-314B

� Project office/branch office 315-319

� Service PE 320-336

� Subsidiary PE 337-349

� Supervisory PE 350-358

� Reassessment 359-365

� Others 366-379

ARTICLE 6 : INCOME FROM IMMOVABLE PROPERTY

� Scope of provision 380-382

ARTICLE 7 : BUSINESS PROFITS

� General 383-390

� General principles under section 9 of the 1961 Act andsection 42 of the 1922 Act 390A-390N

� Business connection 391-496

� Business profit vs. Royalty 497-519

� Commission 520-599

� Composite contract 600-611A

� Condition as to existence of PE 612-676

� DTAA with no FTS provision 677-679

� Expenses, allowability of 680-685

� Foreign PE, profit arising from 686-688

� MAT provisions 689

� Offshore supplies 690-703A

� Profit attributable to PE/Apportionment of income 704-743

� Purchase of goods for export 744-753

� Reimbursement of expenses 754-779

� Right to tax 780

� Services rendered/works executed outside India 781-835

� Situs of contract, relevance of 836-837

� Transactions with head office 838-855

� Penalty 856-858

CONTENTS I-8

CASE NOS.


� Revision 863

� Others 864-893

ARTICLE 8 : SHIPPING, INLAND WATERWAYS TRANSPORTAND AIR TRANSPORT

� General 894-898

� Control and management, place of 899-909

� Operation of ships or an aircraft 910-960

� Owner of ship 961-966

� Liable to tax, connotation of 967

� Others 968-972

ARTICLE 10 : DIVIDEND

� General 973

� Taxing right 974-979

� Liable to tax, connotation of 980

� Rate of tax 981-985

� Quantum of relief 986-994

� Others 995-997

� Position under 1922 Act 998

ARTICLE 11 : INTEREST

� General 999-1015

� Beneficial owner 1016

� Bill discounting 1017-1018

� Interest paid by branch to head office 1019-1037

� Interest on bank deposits 1038-1042

� Interest on income tax refund 1043-1060

� Interest on ECB loan 1061-1065

� Interest paid by subsidiary 1066

� Interest on bonds/debentures 1067-1078

� Usance interest 1079-1082

� Rate of tax 1083-1084

� Others 1085-1090A

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CASE NOS.

� Position prior to 1-6-1976 1091

� Position under 1922 Act 1092-1093

ARTICLE 12 : ROYALTIES/FEES FOR TECHNICAL SERVICES

� General 1094-1166

� Accreditation fee 1167

� Advertisement service 1168-1175A

� Advisory, consultancy and professional service 1176-1227

� Affiliation fee 1228

� Air traffic service 1229

� Annual maintenance service 1230

� Arranger fee 1231-1233

� Beneficial owner 1234-1235

� Bio-analytical services 1236

� Broadcasting service 1237-1259

� Certification service 1260-1267

� Cinematographic films rights 1268-1276

� Clinical trial services 1277-1280


� Composite contract 1306-1309

� Computer software 1310-1438

� Construction activity 1439-1440

� Credit rating services 1440A

� Database, use of 1441-1455

� Data processing services 1456-1471

� Debtor collection services 1472

� Design, drawing and documentation/technicalcollaborations/technical services 1473-1569

� Dredging work 1570

� Event management services 1571

� Education service 1572-1578

� Feasibility report 1579-1581

� Financial and accounting services 1582-1584

� Forex fluctuation gains 1585-1586

� Guarantee fee 1587

� Health-care service 1588-1589

� Information technology support services 1590-1597

CONTENTS I-10

CASE NOS.

� Installation services 1598-1607

� Insurance service 1608-1609

� Intellectual property rights, use of 1610-1615

� Lease line charges 1616-1621

� Legal services 1622-1623

� Logistic services 1624-1625

� Make available 1626-1698

� Management service 1699-1717

� Marketing services 1718-1725

� Mineral oil exploration services 1726-1733

� News agency 1734

� Penalty 1735-1737

� Photograph, use of 1738

� Principle of mutuality 1739

� Procurement service 1740-1742

� Rate of tax 1743-1760A

� Recruitment agency 1761-1763

� Referral fee 1764-1765

� Repair and maintenance service 1766-1774

� Research work 1775-1783

� Retainership charges 1784


� Satellite/transponder, use of 1803-1817

� Secondment of employees 1818-1830

� Server, maintenance services 1831-1833

� Specialized knowledge and expertise 1834-1837

� Standard operating procedure 1838

� Subscription fee 1839-1841

� Supervisory service 1842-1850

� Survey fee 1851-1852

� Technical services/technical collaboration/Telecom 1853-1883service/transmission services

� Transmission charges 1884

� Testing service 1885-1889

� Trademark/patent, use of 1890-1897

� Training services 1898-1911

� Translation services 1912

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CASE NOS.

� Vessel hire charges 1913-1919

� Warehousing services 1920-1921

� Web hosting services 1922

� Wide area network services 1923

� Agreement entered prior to 1-4-1976 1924-1945

� Others 1946-1979

ARTICLE 13 : CAPITAL GAIN


� Assets situated outside India 1989-1995

� Buy back of shares 1996-1999

� Controlling interest 2000-2002

� FIIs, in case of 2003-2008

� Government securities 2009

� Immovable property 2010-2013

� Movable assets 2014-2016

� Mutual fund units 2017

� Other property, transfer of 2018-2020

� Shares/units, transfer of 2021-2063

� Indirect transfer 2064


� Others 2067

ARTICLE 14 : INDEPENDENT PERSONAL SERVICES

� General 2068-2069

� Article 14 vs. Article 7 2070

� Article 14 vs. Article 12 2071-2072

� Professional services, meaning of 2073-2075

� Stay in India 2076-2078

� Audit services 2079-2082

� Film shooting, in case of 2083

� Legal services 2084-2094

� Scientific services 2095

� Software development services 2096

� Supervisory services 2097

� Partnership firm, in case of 2098-2103

CONTENTS I-12

CASE NOS.

ARTICLE 15 : INCOME FROM EMPLOYMENT


� Salary vs. Fees for technical services 2155

� Off break period, salary for 2156-2164

� Perquisites 2165-2169

� Retention money 2170

� Salary payable by Government outside India 2171-2173

� Others 2174-2176

ARTICLE 16 : DIRECTOR’S FEES


ARTICLE 17 : ENTERTAINERS & SPORTS PERSONS


ARTICLE 18 : PENSION


ARTICLE 19 : GOVERNMENT SERVICE

� Scope of provision 2188

ARTICLE 21 : OTHER INCOME


ARTICLE 23A : ELIMINATION OF DOUBLE TAXATION

� Scope of provisions 2196-2207

� Computation of relief 2207A-2256

� Overriding effect of DTAA 2257-2293

ARTICLE 24 : NON-DISCRIMINATION


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CASE NOS.

ARTICLE 25 : MUTUAL AGREEMENT PROCEDURE


ARTICLE 30 : ENTRY INTO FORCE


INDIAN INCOME-TAX ACT, 1961

� Foreign company, fees for technical services [section 10(6A)] 2338-2341

� Rule 10 2342-2351

� Shipping business, profits and gains in case of non-residents[section 44B] 2352-2382

� Mineral oils, special provisions for computing profits andgains in connection with business of exploration, etc. of[section 44BB] 2383-2534

� Aircraft, special provisions for computing profits andgains of business of operation of, in case of, non-residents[section 44BBA] 2535-2538

� Civil construction business, special provisions for computingprofits of foreign companies engaged in [section 44BBB] 2539-2549

� Head office expenses [section 44C] 2550-2596

� Royalties in case of foreign companies [section 44D] 2597-2624

� Royalties, in case of non-resident [section 44DA] 2625-2628

� Non-resident, special provisions relating to certain income[sections 115C to 115-I] 2629-2644

� Shipping business in case of non-resident [section 172] 2645-2682

� Non-resident, agent of [section 163] 2683-2794

� Interest, etc., paid to non-resident without deduction of taxat source [section 40(a)(i)] 2795-2871

� Non-resident, payment to - Deduction of tax at source[section 195] 2872-3002

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SUBJECT INDEX i-xviii

CONTENTS I-14

CASE NOS.

Chapter-heads I-5

List of cases digested I-15-I-146

List of cases affirmed/reversed/overruled/approved/disapproved I-147-I-152

List of cases against which SLP Dismissed/Granted bySupreme Court I-153-I-154

SECTION 92 : COMPUTATION OF INCOME FROM INTER-NATIONAL TRANSACTION HAVING REGARD TO ARM’SLENGTH PRICE


� Transactions with AE alone are covered 27-34

� Burden of proof 35-38

� Multiple transactions, in case of 39-40

� Advance ruling, in case of 41

� Section 92 vs. Section 9 42

� Section 92 vs. Section 45 43

SECTION 92A : ASSOCIATED ENTERPRISE

� Conditions precedent 44-51

� ‘Influence’ as occurring in section 92A(2)(i) 52

� Illustrations 53-61

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TRANSFER PRICING DIGEST

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CASE NOS.

SECTION 92B : INTERNATIONAL TRANSACTION

� Conditions precedent 62-77

� AMP expenses 78-108

� Branch office/project office, transaction with 109-111

� Business transfer 112

� Call option rights 113-114

� Corporate guarantee 115-122

� Lending or borrowing/capital financing 123-141

� Reimbursement of expenses 142

� Pre-incorporation expenses 143

� Royalty, payment of 144-146

� Shares issued at premium 147-154

� Share application money 155-163

� Shareholder’s deposit 164

� Others 165-175

SECTION 92BA : SPECIFIED DOMESTIC TRANSACTION

� Scope of provisions 176

SECTION 92C : METHODS FOR DETERMINING ARM’SLENGTH PRICE

� General 177-184

� Most appropriate method, determination of 185-201

� Rule 10A 202

� Rule 10B 203-216

� Berry ratio 217-221

� Bright line test 222-225

� Cost plus method 226-246

� Cup method 247-383

� Discounted cash flow method 384-387

� Excess earning method 388

� Profit split method 389-399

� Resale price method 400-440

� TNM method 441-562

� Others 563-578

CONTENTS I-8

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CASE NOS.

SECTION 92C : COMPARABLES - GENERAL PRINCIPLES

� General 579-624

� Recording of reasons 625-630

SECTION 92C : COMPARABLES - FUNCTIONAL SIMILARITY

� General 631-651

� BPO-Call centre 652-673

� Business support services 674-705

� Consultancy service providers 706-709

� Engineering services 710-737

� Health case/pharma supplies services 738-742

� High end service providers 743-746

� Infrastructure management services 747

� Insurance services 748

� Investment advisory services 749-790

� Information Technology Enables Services (ITES) 791-928

� Job workers 929

� Knowledge Process Outsourcing (KPO) 930-948

� Manufacturer 949-968

� Marketing support services 969-1018

� Medical transcription services 1019-1022

� Publisher, in case of 1023-1024

� R&D services providers, in case of 1025-1047

� Ship management services 1048-1049

� Software consultancy/development services 1050-1385

� Technical support service provider 1386-1391

� Traders 1392-1398

� Others 1399-1450

SECTION 92C : COMPARABLES - FACTORS DETERMININGSUITABILITY OF COMPARABLES

� Abnormal events 1451-1545

� Accounting year 1546-1585

� Brand value 1586-1631

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CASE NOS.

� Current year vs. Multiple year data 1632-1667

� Data in public domain 1668-1694

� Employees cost filter 1695-1743

� Exclusion of comparable selected by assessee himself 1744-1758

� Export filter 1759-1778

� Financial statement 1779-1792

� Foreign comparable 1793-1801

� Geographical location of comparables 1802-1808

� Government/public companies 1809-1819

� Internal comparables 1820-1827

� Import filter 1828-1829

� Intangible assets 1830-1833

� Loss making company 1834-1881

� Product line/customer base 1882-1886

� Profit margin/profit level indicator 1887-1927

� R&D filter 1928

� Res judicata 1929-1942

� Revenue filter 1943-1947

� Related party transactions 1948-2050

� Segmental result 2051-2151

� Selection of new comparable 2152

� Size and economics of scale/high risk companies 2153-2195

� Super profit making companies 2196-2236

� Turnover filter 2237-2367

� Unreliable financial statement 2368-2381

� Others 2382-2456

SECTION 92C : TRANSFER PRICING ADJUSTMENTS -GENERAL PRINCIPLES

� International transactions with AEs 2457-2505

� Benefit from transaction/allowability of expenditure 2506-2523

� Other general issues 2524-2565

CONTENTS I-10

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CASE NOS.

SECTION 92C : TRANSFER PRICING ADJUSTMENTS - ILLUS-TRATIONS

� Administrative services 2566-2569

� Aggregation of transactions 2570-2589

� Allocation of expenses 2590-2610

� AMP expenses 2611-2679

� Assignment fee 2680

� Capacity utilization 2681-2715


� Compensation 2751-2752

� Consultancy fees 2753-2757

� Corporate charges 2758-2760

� Cost of goods sold 2761-2767

� Custom duty 2768

� Depreciation 2769-2793

� Discounts 2794-2797

� Distribution fee 2798

� Dividends 2799

� Employee cost 2800-2801

� Entity level vs. Transaction level 2802-2806

� ESOP 2807-2808

� Export/Domestic sale 2809-2825

� Foreign exchange gain/loss 2826-2902

� Financial service fees 2903

� Forward contracts 2904

� Goodwill 2905

� Guarantee commission 2906-2941

� Head office expenses 2942-2943

� HRM expenses 2944

� Import duty 2945-2946

� Indirect cost 2947-2949

� Interest 2950-3140

� Lease rental 3141

� Legal and professional fees 3142-3144

� License fees 3145-3146

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CASE NOS.

� Loss in transit 3147-3148

� Management fee 3149-3181

� Marketing expenses 3182-3191

� Non-compete fees 3192

� Obsolete stock, provisions for 3193

� Operating profit/cost, computation of 3194-3310

� Product recall expenses 3311

� Purchases/imports 3312-3338

� Raw material 3339-3354


� Research expenses 3394-3395

� Risk adjustment 3396-3439

� Royalty 3440-3556

� Salaries 3557-3562

� Samples 3563

� SAP expenses 3564-3566

� Sponsorship cost 3567

� Support services fee 3568-3577

� Technical services fee 3578-3585

� Trademark expenses 3586-3589

� Travelling expenses 3590

� Volume adjustment 3591-3592

� Working capital adjustments 3593-3657


� Others 3661-3729

SECTION 92C(4) : COMPUTATION OF TOTAL INCOME

� Sub-section (4) of section 92C 3730-3738

SECTION 92CA : REFERENCE TO TPO

� Application of provision 3739-3760


CONTENTS I-12

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CASE NOS.

SECTION 92CB : SAFE HARBOUR RULES

� General 3846-3873

� 5% variation in pricing - Position prior to 1-10-2009 3874-3882


SECTION 92D READ WITH SECTIONS 271AA & 271G :MAINTENANCE AND KEEPING OF INFORMATION ANDDOCUMENTS


SECTION 92E READ WITH SECTION 271BA : REPORT FROMACCOUNTANTS

� Application of provision 3977-3984

SECTION 144C : DISPUTE RESOLUTION PANEL

� Jurisdiction and powers of DRP 3985-4027

� Constitution of DRP 4028

� Section 144C v. Section 153 4029

� Eligible assessee 4030-4034

� Passing assessment order 4035-4058

� Speaking order 4059-4104

� Period of limitation 4105-4112

� Writ remedy 4113-4121

� Others 4122-4139

SECTION 271(1)(c) : PENALTY


OTHERS

� Stay of demand 4155-4161

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SUBJECT INDEX i-xii

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