TaxTMI 
TaxTMI 
2016 (3) TMI 1208
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....nt support services to group entities in Asia Pacific Region. During Assessment Year 2011-12 the Petitioner has rendered management support services to its 100 percent Indian subsidiary, DDIL and has received a management fee of INR 225,691,365/- pursuant to the Agreement for provision of Management, General Support and Administrative services entered into between the said parties. In the return of income filed for the year under consideration, DD Asia claimed the said receipt as non- taxable in India, not being in the nature of Fees for Technical Services under Article 12(4) of the India-Singapore Double Tax Avoidance Agreement (DTAA) as it had not made available to DDIL, any technical knowledge, experience, skill know-how or processes whi....
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.... 9 days was less than the threshold prescribed in Article 5(6) of the India-Singapore DTAA and therefore could not constitute a PE with regard to the services rendered pursuant to the management fee received by the Petitioner. 89 days were not required to be recorded for the expenses of PE in India as no profits resulted from the said activity as the main objective of determining the existence of a PE was to attribute and tax resultant profits. The particulars of tax demand is hereby mentioned below:- (Amount in INR) PARTICULARS AMOUNT The amount of tax demanded 85,778,517 The amount of tax disputed therefrom 85,778,517 Amount of tax outstanding 85,778,517 Less: Tax deducted at source 23,601,635 Net Tax l....
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....ent in India because 9 days services was rendered which is less than the threshold of 30 days as per Article 5(6) of the India- Singapore Double Tax Avoidance Agreement and 89 days activity was in India and 89 days stayed in connection with the shareholder activity/BSNL project for which the assessee company did not charge any fees and only travel cost was recovered, therefore, it is not essential period for PE but the Assessing Officer has wrongly accounted the same hence the provision of PE is not liable to be applicable upon the assessee. It is also argued that without the prejudice of earlier arguments that the petitioner was remunerated on cost plus 10% basis but the Assessing Officer made arbitrary deduction of only 10% as expenses an....
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.... and taxed 90% of the management fees as business income. As per agreement the appellant has earned a mark-up of only 10% and the TPO in the Petitioner's own case has accepted the mark up of 10% to be at Arm's Length Price. No doubt, in view of the said circumstances the maximum income that could be attributed in India would be Rs. 2,05,17,397 (i.e. 10% of Rs. 205,173,968). Consequently, tax demand raised to the tune of Rs. 8,664,497 (i.e. 42.33% of Rs. 2,05,17,397) which is far less than the tax deducted at source in case of the Petitioner (i.e. Rs. 23,601,635). Moreover TDS is also more than the tax liability if assessed upon the receipt @ 10%. In view of the said circumstances, it is argued that the assessee has a prima facie cas....