9911796707
TMI BlogTaxation of IT-enabled Business Process Outsourcing Units in IndiaX X X X Extracts X X X X X X X X Extracts X X X X ..... nt entity may not be a Permanent Establishment of the non-resident entity, and the resident entity would have to be assessed to income-tax as a separate entity. In such a case, the non-resident entity will not be liable under the Income-tax Act, 1961. 2. However, it is possible that the non-resident entity may have a business connection with the resident Indian entity. In such a case, the residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. The non-resident entity or the foreign company will be liable to tax in India only if the IT-enabled BPO unit in India constitutes its Permanent Establishment. The extent to which the profits of the non-resident enterprise is to be attributed to the activities of such Permanent Establishment in India has been under consideration of the Board. 4. A non-resident or a foreign company is treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts provides that if a foreign enterprise carries on business in another country through a Permanent Establishment situated therein, the profits of the enterprise may be taxed in the other country but only so much of them as is attributable to the Permanent Establishment. Paragraph 2 of the same Article provides that subject to the provisions of Paragraph 3, there shall in each contracting state be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and the provisions of the Income-tax Act, 1961. 6. Paragraph 2 contains the central directive on which the allocation of profits to a Permanent Establishment is intended to be based. The paragraph incorporates the view that the profits to be attributed to a Permanent Establishment are those which that Permanent Establishment would have made if, instead of dealing with its Head Office, it had be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
