• Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 2/17/2014

India - Subsidiary performing “back office” support not PE 

February 17:  The KPMG member firm in India has prepared reports on the following developments (read the January and February 2014 reports by clicking on the hyperlinks provided below:
  • Expenditure incurred in relation to exempt income disallowed - The Central Board of Direct Taxes issued guidance (a circular) addressing the disallowance of an expenditure that is incurred in relation to exempt income, even when no exempt income was earned by a taxpayer during the financial year.

    Read a February 2014 report [PDF 271 KB]

  • Indian subsidiary of a foreign company providing “back office” support is not a PE in India - The Delhi High Court held that a subsidiary in India, itself alone, does not give rise to a fixed-place permanent establishment (PE) under the India-United States income tax treaty. Here, the taxpayers neither had a fixed place of business in India through which business was wholly or partly conducted, nor had right to use any of the premises belonging to an Indian entity. Furthermore, the Indian subsidiary was not authorized (and did not habitually exercised authority) to conclude contracts.

    The case is: e-Fund Corporation, USA and e-Fund IT Solutions Group Inc., USA. Read a February 2014 report [PDF 494 KB]

  • Revised PAN allotment process change - Recently, the Central Board of Direct Taxes changed the process of allotment of permanent account number (PAN).

    Read a January 2014 report [PDF 335 KB]

  • Supreme Court on application before AAR when the income tax return already been filed - The Supreme Court of India held the fact the income tax return has already been filed does not bar an application for action by the Authority for Advance Rulings (AAR).

    The case is: Sin Oceanic Shipping ASA. Read a January 2014 report [PDF 380 KB]

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