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India: No permanent establishment of U.S. entity; treatment of compulsory convertible debenture sales

India: No permanent establishment of U.S. entity

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).


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  • Indian subsidiary not permanent establishment under India-United States income tax treaty:  The Mumbai Bench of the Income-tax Appellate Tribunal held that an Indian subsidiary of a U.S. tax group was not a permanent establishment (PE) in India under a provision of the India-United States income tax treaty. The tribunal found that the taxpayer was not a “fixed place” PE nor was it a service or agency PE. The case is: Gemological Institute of America. Read a June 2019 report [PDF 473 KB]

  • Sale of “compulsory convertible debentures” not colourable device: The Mumbai Bench of the Income-tax Appellate Tribunal held that transactions conducted by the taxpayer concerning the sale of “compulsory convertible debentures” to a related concern that resulted in a short-term capital loss was a genuine loss, and could not be construed as a “colourable device” to defraud the tax administration. The case is: Essar Teleholdings Ltd. Read a June 2019 report [PDF 696 KB]

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