TaxTMI 
TaxTMI 
TaxTMI 
2021 (6) TMI 1081
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....3/2018 (Pr. Commissioner of Income Tax-5 and another v. M/s. Puma Sports India P., Ltd.,). 4. This Court in the aforesaid judgment has held as under: "4. Heard the learned Counsel appearing for the parties and perused the record. 5. Learned Counsel for the appellants-Income Tax department has placed reliance upon a judgment delivered by the Hon'ble Supreme Court in case of GVK INDUSTRIES LTD. AND ANOTHER VS. INCOME TAX OFFICER AND ANOTHER reported in 371 SC ITR 453 and his contention is that in the light of the aforesaid judgment, the Tribunal has erred in law and fact in allowing the appeal. He has vehemently argued before this Court that the assessee has failed to deduct TDS in view of specific provision of Section 5(2)(b) read with Section 9(1)(i) of the Act and the expenses made by the assessee without deducting the TDS are not at all allowable as per the provisions of Section 40(a)(i) of the Act. He has also contended that the income of non resident by way of commission is to be considered as accrued or arisen or deemed to accrue or arise in India. 6. On the other hand, learned Counsel for the respondent-assessee has supported the order passed by the Tribunal and has p....
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....e services of such agent were rendered/utilized outside India and the commission was paid outside India. It is nobody's case that the Associated Enterprises rendered services inside India in the form of placing orders with the manufacturers. Undisputedly, the services were rendered outside India and the commission was paid outside India and therefore, the Tribunal was justified in holding that the TDS is not deductible from commission payment to a foreign agency on foreign soil. 9. This Court has carefully gone through the judgment delivered in the case of GVK Industries Ltd. (supra). In the aforesaid case, a Non-Resident Company had acted as a consultant to assessee-GVK Industries Ltd. (supra). It had skill, acumen and knowledge in specialized field. It provided consultancy services to the assessee and it was held by the Hon'ble Supreme Court that the amount paid as fee was taxable under the head 'fee for technical services'. The Apex Court in the aforesaid case, at paragraphs-20 to 24 has held as under: 20. At this juncture, it is demonstrable that NRC is a Non-Resident Company and it does not have a place of business in India. The revenue has not advanced a case that the in....
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....es" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries".] 21. Explanation to the Section 9(2) was substituted by the Finance Act 2010 with retrospective effect from 1.6.1976. Prior to the said substitution, another Explanation had been inserted by the Finance Act, 2007 with retrospective effect from 1.6.1976. The said Explanations read as under: "As amended by Finance Act, 2010 Explanation.- For the removal of doubts, it is hereby declared that for the purposes of this section, income of a nonresident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause (vii) of subsection (1) and shall be included in the total income of the non-resident, whether or not,- (i) the non-resident has a residence or place of business or business connection in India; or (ii) the non-resident has rendered ....
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....le of "tax mitigation" and in order to protect their citizens, grant benefit of tax abroad under the domestic legislation under the bilateral agreements. 24. The two principles, namely, "Situs of residence" and "Situs of source of income" have witnessed divergence and difference in the field of international taxation. The principle "Residence State Taxation" gives primacy to the country of the residency of the assessee. This principle postulates taxation of world-wide income and world-wide capital in the country of residence of the natural or juridical person. The "Source State Taxation" rule confers primacy to right to tax to a particular income or transaction to the State/nation where the source of the said income is located. The second rule, as is understood, is transaction specific. To elaborate, the source State seeks to tax the transaction or capital within its territory even when the income benefits belongs to a non-residence person, that is, a person resident in another country. The aforesaid principle sometimes is given a different name, that is, the territorial principle. It is apt to state here that the residence based taxation is perceived as benefiting the developed....
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....ome accruing therefrom shall be deemed to have accrued in India. If, however, all the operations are not carried out in the taxable territories, the profits and gains of business deemed to accrue in India through and from business connection in India shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories. If no operations of business are carried out in the taxable territories, it follows that the income accruing or arising abroad through or from any business connection in India cannot be deemed to accrue or arise in India. (See Commissioner of Income-tax, v. R. D. Aggarwal & Co. and M/s. Carborandum Co. v. C.I.T., which are decided on the basis of section 42 of the Indian Income-tax Act, 1922, which corresponds to Section 9(1)(I) of the Act.) 13. In the instant case the non-resident assessees did not carry on any business operations in the taxable territories. They acted as selling agents outside India. The receipt in India of the sale proceeds of tobacco remitted or caused to be remitted by the purchasers from abroad does not amount to an operation carried out by the assessees in India as contemp....