2007 (11) TMI 626

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....assessee company is exigible to tax in India. 3. We have heard the rival submissions. Admittedly the assessee is a resident in India. The profits of the assessee include profit earned by the USA branch. It was submitted before the Commissioner (Appeals) that the overseas branch was assessed to tax in USA and as such as per DTAA the profit of the USA branch is not to be taxed in India again. After considering the income and expenditure of the overseas branch the assessee had worked out profit before tax amounting to Rs. 1,32,98,743/-. From the said profits the assessee had excluded profit of Rs. 17,55,796/- on the ground that this amount was already taxed in USA. This amount was said to be the net receipt of the USA branch of the assessee....

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....e is reproduced below:- "1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to (a) that permanent establishment; (b) sales in the other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities carried on in the other State of the same or similar kind as those effected through that permanent establishment. 2. Subject to the provisions....

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....ent), whether incurred in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any if its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights or by way of commission or other charges for specific services performed or for management, or except in the case banking enterprises by way of interest on moneys lent to the permanent establishment. Li....