Withdrawal of Instruction No. 1829, dated 21-9-1989

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....deals with the taxability of income arising to non-residents from the execution of power projects on turn key basis involving activities to be carried out in India as well as outside India. The instruction analyses a hypothetical situation and taxability thereof. The instruction lays down the basis of taxation with regard to the four activities listed therein. With regard to the activity relating ....

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.... the contract is split even when only one contractor/supplier bid for the project. In such cases the contract is split into various components to be executed by the bidder and its associate concerns. Thus consortium of foreign companies is not in existence but is created to take advantage of the instruction. This is not the same case as "consortium of foreign companies" envisaged in the instructio....

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....turnkey power project, for a given situation, is being relied upon by assessees in all cases, in all situations, to align their business operation in a manner to avoid payment of taxes in India, This was never the purpose of issuance of this instruction. Accordingly, the Central Board of Direct Taxes hereby withdraws the instruction No 1829, dated 21-09-1989 with immediate effect. 6. It is clar....