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Taxation and Other Laws Amendment Act, 2026 further enriches incentives galore (See TII EDIT) G20 trade gains momentum in Q2 (See TII BRIEF) TP - Limited-risk reseller cannot be benchmarked against full-fledged product companies due to fundamental differences in FAR profiles: ITAT (See Breaking News) INTL - Google AdWords platform operating as standard, automated, self-service portal where users independently manage keywords, budgets & ad copies through packaged algorithms, does not entail rendering technical services needing transfer of technology or human intervention: ITAT (See Breaking News) I-T - If foreign tax payment is evidenced and income is identical, credit should be granted even if form was filed during appellate proceedings: ITAT (See Breaking News) INTL - Ex parte assessment order upheld where assessee failed to respond to various notices issued during assessment proceedings & had not properly represented his case before DRP: ITAT (See Breaking News) DTAA - Support services being of nature of routine administrative & business-support services, fall within definition of royalty under relevant DTAAs: ITAT (See Breaking News) TP - Certain companies merit being dropped as comparables where their activities are functionally different from those of the assessee : ITAT (See Breaking News) TP - LIBOR rate plus 300 bps should be applied for benchmarking interest on loans to subsidiaries repayable in foreign currency: ITAT (See Breaking News) TP - High-end KPO services involving specialized domain expertise such as engineering design and data analytics are not comparable to low-end BPO services such as payroll and accounts reconciliation: ITAT (See Breaking News) INTL - Although outstanding receivables from an AE constitute a separate international transaction amenable to benchmarking, determination of ALP has to depend upon the facts and circumstances of each case: ITAT (See Breaking News) TP - An APA concluded by CBDT, though not directly applicable to earlier AY, has significant persuasive value where nature of international transactions & FAR profile remain comparable: ITAT (See Breaking News) INTL - Penalties u/s 271AA & 271G not valid where AO failed to point out any specific missing documents & where TPO already accepted transactions at arm's length after verification: ITAT (See Breaking News) TP - Huge turnover or profit cannot serve as sole basis for exclusion of comparable if company is otherwise functionally comparable under Rule 10B(2): ITAT (See Breaking News) TP - Once tested party's margins are found to be at arm's length under TNMM, and adequate working capital adjustment is made, no separate adjustment on account of notional interest on delayed receivables from AEs is warranted: ITAT (See Breaking News) TP - For benchmarking interest on External Commercial Borrowing obtained from Associated Enterprise, CUP method is most appropriate method, as price of lending transaction can be directly compared with comparable uncontrolled loans: ITAT (See Breaking News) TP - AMP and R&T expenses do not constitute 'international transactions' u/s 92B in absence of agreement to provide services to AEs: ITAT (See Breaking News) DTAA - Receipts received by Hong Kong tax-resident assessee for providing managed, systems integration and hi-tech transactional services to Standard Chartered Bank through its Indian group company, not taxable in India as royalty or FTS: ITAT (See Breaking News)
 
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CBDT invites comments on report pertaining to Profit Attribution to PE
By TII News Service
Apr 18, 2019 , New Delhi

    

Taxation of non-residents in India is governed by the provisions of the Income-tax Act, 1961 and the provisions of the Double Taxation Avoidance Agreement(s) [DTAA(s)] concluded or adopted by the Central Government under the powers conferred under Section 90 or 90A of the Act, respectively. The business income of a non-resident can be taxed in India if it satisfies the requisite thresholds provided under the Act as well as the threshold provided in the applicable tax treaty, by a concept of Permanent Establishment (PE), which is defined in Article 5 of Model Tax Conventions and tax treaties. Under Article 7 in the Indian treaties, profits are to be attributed to the PE as if it were a distinct and separate entity on the basis of the accounts of the PE and where such accounts are not available to enable determination of profits attributable to the PE, the profits attributable to the PE can be determined under the domestic laws. For the application of this method, the Assessing Officer in India can resort to Rule 10 of Income-tax Rules, 1962.

Recognizing the significance of issues relating to attribution of profits to a permanent establishment as well as the need to bring greater clarity and predictability in the applicable tax regime, a Committee was formed to examine the existing scheme of profit attribution to PE under Article 7 of DTAAs and recommend changes in Rule 10 of the Income-tax Rules, 1962. The Committee has submitted its report and it has been decided to seek suggestions/comments of the stakeholders and the general public. For this purpose, the notice seeking suggestions/comments of the stakeholders and the general public alongwith the report of the Committee on profit attribution has been placed in public domain and can be accessed at www.incometaxindia.gov.in . Suggestions/comments on the same may be furnished electronically at the email address usfttr-1@gov.in within 30 days of the publication of the aforementioned document on the website of the Department .

 
 
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