Permanent establishment rules require arm's length attribution of profits to Indian IT enabled BPO units for tax liability in India. A non resident is taxable in India only if an Indian IT enabled BPO unit constitutes its Permanent Establishment; where a Permanent Establishment exists, profits attributable to it must be determined under Article 7 by attributing the profits the establishment would have earned as a separate enterprise, applying the arms length principle and allowing deductible expenses in accordance with accepted accounting principles and the Income tax Act; arms length price is as defined in section 92F(iii) and sections 92-92F apply. The earlier CBDT Circular No.1/2004 is withdrawn.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Permanent establishment rules require arm's length attribution of profits to Indian IT enabled BPO units for tax liability in India.
A non resident is taxable in India only if an Indian IT enabled BPO unit constitutes its Permanent Establishment; where a Permanent Establishment exists, profits attributable to it must be determined under Article 7 by attributing the profits the establishment would have earned as a separate enterprise, applying the arms length principle and allowing deductible expenses in accordance with accepted accounting principles and the Income tax Act; arms length price is as defined in section 92F(iii) and sections 92-92F apply. The earlier CBDT Circular No.1/2004 is withdrawn.
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