Sale of third-party products would be characterised as income from `business profits' and not fee for technical services.
The
Mumbai Income Tax Appellate Tribunal in a recent decision concerning
eBay International AG ruled that the revenue of the taxpayer from sale
of third-party products on its Web site would be characterised as income
from `business profits' and not fee for technical services, as the
taxpayer did not play any role in effecting the sales apart from
displaying the products. Further, the Tribunal held that the dependent
agents deployed for support services in India did not create a Permanent
Establishment, or PE, for the taxpayer under the `Agency PE rule', as
they had no authority to conclude contracts on behalf of the taxpayer.
In the absence of a PE such `business profits' were not taxable in
India.
Don't repeat the question, Taxman!
The Delhi High
Court in a recent decision concerning Rio Tinto India Pvt Ltd held that
certain fundamental issues such as the date of commencement of a
business that has attained finality in one year, cannot be reopened. The
Court held that once the tax officer has assessed the income of a
taxpayer in a particular assessment year, it would be unfair to make the
taxpayer establish its date of commencement for every successive
assessment year. The Court observed that the Revenue cannot influence
its decision on the date of commencement of the business based on the
fact that the income of the taxpayer over the successive assessment
years has been meagre in comparison to its expenditure.
FAQs on advance pricing agreements
The
Advance Pricing Agreements programme introduced by Finance Act, 2012
came into effect from July 1, 2012. Further, the Central Board of Direct
Taxes announced the APA guidelines on August 31. Based on consultations
and feedback, the CBDT is likely to issue more clarifications. The
guidelines are likely to be in an FAQ format and expected to be released
in the coming weeks.
PF relief for international workers
The
Ministry of Labour and Employment recently issued a notification
amending the Provident Fund scheme as applicable to `International
Workers':
International Worker covered under a social security
agreement entered between India and another country can withdraw
contributions from the Provident Fund on termination of employment with
Indian employer.
International Worker can withdraw from the Provident Fund either directly or through the employer.
The
amendment will benefit foreign nationals who have contributed to the
Provident Fund in India before the agreement between their home country
and India came into force.
However, those from countries with
which India does not have a social security agreement will still be
eligible to withdraw from the Provident Fund after reaching the age of
58.