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2018 (6) TMI 208 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHIRepresentative/liaison office (LO) - Doctrine of Mutuality - India-Belgium DTAA - whether the liason office proposed to be established by in India would be liable to income-tax or India – whether membership fee and contribution from the Indian members would be liable to Income-tax – Applicant is rendering specific services for its members, income derived by it falls under section 28(iii) as ‘Profits and Gains of Business and Profession’? - PE in India - Held that:- Simply because some incidental activity of the assessee-society is revenue generating, the same does not provide any justification to hold that it is tainted with ‘commerciality’ and reaches a point where relationship of mutuality ends and that of trading begins. Where the principle of mutuality operates,and the profits cannot be distributed, but can only be utilized for the benefit of members and confined to the objects of the organization, receipts or income cannot be brought to tax. - the Applicant’s activities are on the principle of mutuality, and it is not created for doing business or earning profits. A PE to come into existence, within the meaning of Article 5 of the said DTAA, in the first place there should be a fixed place of business through which the business of an enterprise is wholly or partly carried on. Once we hold that the Applicant works on the principle of mutuality and is not an enterprise set up for the purpose of doing business or earning profit, the question of any PE coming into existence does not arise. The Liaison Office (LO) proposed to be established would not be liable to tax in India under the provisions of the Income-tax Act, 1961 or the India-Belgium DTAA. Membership fee and contribution from members received by IZA Belgium from the Indian members would not be liable to Income-tax in India under the provisions of the Income-tax Act, 1961 or the India-Belgium DTAA.
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