India: No permanent establishment found; minimum alternative tax on sale of asset
India: No permanent establishment found
The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).
- Mauritian company not a fixed PE or agency PE: The Mumbai Bench of the Income-tax Appellate Tribunal, in a case concerning the determination of a permanent establishment (PE) in India under the India-Mauritius tax treaty, held that the taxpayer did not constitute a fixed place PE in India under Article 5(1) of the tax treaty since there was no permanent infrastructure, office, supervisory staff, and tangible and intangible assets in India. In this case, the company directors were in the UAE and exercised their control over the affairs of the taxpayer from the UAE. The tribunal also held that the taxpayer did not constitute an agency PE in India since the Indian agents were not exclusively working for the taxpayer and the services provided to the taxpayer by these agents were in the ordinary course of their business. The case is: Overseas Transport Co. Ltd. Read a September 2020 report [PDF 283 KB]
- Benefit of indexed cost of acquisition available on sale of long-term capital asset for minimum alternate tax (MAT) purposes: The Karnataka High Court, in a case concerning the sale of a long-term capital asset, held that the taxpayer was entitled to the benefit of an indexed cost of acquisition on the sale of the long-term capital asset when computing the MAT liability. The High Court also held that the taxpayer was entitled to a deduction of interest paid against the interest earned on deposits because there was a nexus between the interest paid to creditors and the interest earned on deposits. The interest expenditure was incurred wholly and exclusively for the purpose of earning the interest income. The case is: Best Trading and Agencies Ltd. Read a September 2020 report [PDF 303 KB]
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