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2010 (2) TMI 124 - AAR - Income TaxLaird USA has negotiated an arrangement with Nokia to manufacture and supply products to Nokia Corporation globally. On 25th June, 2003 a Product Purchase Agreement (PPA) has been executed by and between Nokia Corporation, Finland, and its affiliates on the one part and the Laird USA and its affiliates on the other part. The PPA, inter alia, covers the supply of products in relation to Nokia’s manufacturing requirements in India - The applicant states that as per the agreement, it would act in an independent status and supply the products to Nokia India at its own risk and obligations. The applicant asserts that no agency relationship is intended or created between the applicant and Laird USA and moreover, the applicant’s business is not confined to Nokia India only. Held that: The answer broadly is in the negative. The amount of consideration received by Laird USA from the applicant is in the nature of business profit that has accrued or arisen in India. However, as the recipient – Laird USA has no permanent establishment in India, the same is not liable to be taxed under the Income-tax Act, 1961 having regard to Art.7.2 of the DTAA. - The applicant is not required to withhold tax under Section 195 of the Income-tax Act while making remittance to Laird USA as it has not derived any income chargeable to tax in India.
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