International Taxation Where an Establishment Did Not Have PE in India the Receipt in Question Cannot be Brought to Tax

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The Tax Publishers Where an Establishment Did Not Have PE in India the Receipt in Question Cannot be Brought to Tax Akhilesh Kumar Sah In IBM India Pvt. Ltd (recent case), IBM Philippines received the monies in the course of their business and did not have PE in India and therefore, it has been held that the receipt in question could not be brought to tax. The learned author analyses the case. 1. Facts of the case in DCIT (International Taxation) v. IBM India Pvt. Ltd. In DCIT (International Taxation) v. IBM India Pvt. Ltd. [IT(IT)A Nos. 1288, 1291, 1294, 1297, 1300, 1303 & 1306/Bang/2017, A.Y. 2009-10 to 2015-16, decided on 16-11-2018], IBM India Pvt. Ltd., (Hereinafter referred to as 'IBM India' or 'Assessee' or 'Respondent'), engaged in the business of selling computers, software, besides rendering Software Development and Information Technology Services and lease financing activities of its products, was a wholly, owned subsidiary of International Business Machines, USA (IBM, USA). The assessee was part of the IBM group that had entities across the world. IBM Group had policy of sending employees of its group in one country on deputation to another group in another country on assignment. Such people sent on deputation were called employees sent on Secondment 'Expatriate Employee', etc. The group had a standard expatriate Agreement to regulate and set out the terms and conditions on which employees of IBM group in one country would be sent on deputation its employees to another group in another country. The terms of the expatriate Agreement dated 1-1-2002 between IBM, UK and IBM, India, whereby IBM, UK agreed to send its employees on request by IBM India to work for IBM India. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Where an Establishment Did Not Have PE in India the Receipt in Question Cannot be Brought to Tax

Akhilesh Kumar Sah

In IBM India Pvt. Ltd (recent case), IBM Philippines received the monies in the course of their business and did not have PE in India and therefore, it has been held that the receipt in question could not be brought to tax. The learned author analyses the case.

1. Facts of the case in DCIT (International Taxation) v. IBM India Pvt. Ltd.

In DCIT (International Taxation) v. IBM India Pvt. Ltd. [IT(IT)A Nos. 1288, 1291, 1294, 1297, 1300, 1303 & 1306/Bang/2017, A.Y. 2009-10 to 2015-16, decided on 16-11-2018],

IBM India Pvt. Ltd., (Hereinafter referred to as 'IBM India' or 'Assessee' or 'Respondent'), engaged in the business of selling computers, software, besides rendering Software Development and Information Technology Services and lease financing activities of its products, was a wholly, owned subsidiary of International Business Machines, USA (IBM, USA).

The assessee was part of the IBM group that had entities across the world. IBM Group had policy of sending employees of its group in one country on deputation to another group in another country on assignment. Such people sent on deputation were called employees sent on Secondment 'Expatriate Employee', etc. The group had a standard expatriate Agreement to regulate and set out the terms and conditions on which employees of IBM group in one country would be sent on deputation its employees to another group in another country. The terms of the expatriate Agreement dated 1-1-2002 between IBM, UK and IBM, India, whereby IBM, UK agreed to send its employees on request by IBM India to work for IBM India.