DTAA and Section 9 of Income Tax Act

[NIKHIL DUREJA]

Dear Professionals,

Greeting

one of my italy client wants to setup his branch in INDIA and the role of branch is just to find customer for italy company , further all the orders recived from INDIA are directly entered with the Italy company , so branch role is to just find interested customers and for this italy company are not giving any commision to its branch .

 

so my question arises - what is the taxability or tax liability of branch , wether branch has to pay any tax or not.???

wether branch will be considered as PE of Italy company and as per section 9 deeming fiction comes into force and it will be deemed that italy company has a business connection in INDIA , therfor so much profit as attributable to branch shall be taxable in INDIA.???

AI Summary

Italian Company Branch in India: Tax Liability as Permanent Establishment Under Section 9 of Income Tax Act A forum participant inquired about the tax implications for an Italian company's branch in India, which is solely responsible for finding customers without receiving commission. The concern was whether the branch would be considered a Permanent Establishment (PE) under Section 9 of the Income Tax Act, thus making the Italian company liable for taxes in India. A respondent clarified that income from business connections in India is taxable, and if a branch is set up, it would be liable for tax on income attributable to operations in India, even if not all operations occur within the country.