LG Cable Ltd. v. Dy. Director of Income Tax (International Taxation)
INCOME TAX ACT, 1961
Double taxation relief - Agreement between India and Korea -Applicability of agreement
Held: Application of provisions under Double Taxation Avoidance Agreement can be re-sorted to only when a tax liability was imposed on an assessee under provisions of Act.
Income-tax Act, 1961, Section 90
INCOME TAX ACT, 1961
Income deemed to accrue or arise in India - Under section 9(1)(i) -Income from offshore supply of equipments -Taxability in India
Assessee, non-resident Korean company, was entered into contract for offshore supplies and offshore services with Indian company. It submitted that in respect of offshore supply of equipment, entire contract relating to said supply was carried out by it in Korea and bill of lading in respect of equipment sold was issued in Korea in favour of PGCIL and consideration for supply of equipments was remitted outside India, income was received outside India and could not be taxed in India. Department held that 10 per cent of income from supply of equipment could reasonably be attributable to operations carried out in India and be taxed in India. Held: Since, delivery of goods, documents and receipts of substantial part of sale consideration did take place outside India, therefore, such income was taxable outside India and not under Indian Law.
Income-tax Act, 1961, Section 5 read with section 9, section 23 of the Sale of Goods Act, 1930 and, CBDT Circular No. 23, dated 23-7-1969
A.Y. : 2002-03
Decision: In favour of assessee.