1. S.5 : Scope of total income – Non-resident – Employees of Indian company sent on assignments – Employees resident of those countries and liable to tax on their worldwide income in those countries for period of their assignment income did not accrue in India and not chargeable to tax in India – Indian Company is not liable to deduct tax on salaries paid in India – Once employees returned and became residents Indian Company can give credit for taxes deducted during deputation outside India – DTAA – India-Germany-USA [Ss. 2(45) 4, 5(2) 9(1)(ii) 15, 90, 192, Art. 4(1), 23, 25]
   

   Authority held that Employees of Indian company sent on assignments, employees resident of those countries and liable to tax on their worldwide income in those countries for period of their assignment income did not accrue in India and not chargeable to tax in India. Indian Company is not liable to deduct tax on salaries paid in India. Once employees returned and became residents Indian Company can give credit for taxes deducted during deputation outside India.

   H. P. India Software Operation P. Ltd., In Re (2018) 401 ITR 339 (AAR)

2. S.5 : Scope of total income – Non-resident – Employees of Indian company sent on assignments – Employees resident of those countries and liable to tax on their worldwide income in those countries for period of their assignment income did not accrue in India and not chargeable to tax in India – Indian Company is not liable to deduct tax on salaries paid in India – Once employees returned and became residents Indian Company can give credit for taxes deducted during deputation outside India – Indian company is not liable to deduct tax on split pay and perquisites received in India but accrued outside India. DTAA – India – USA [Ss. 2(45) 4, 5(2) 9(1)(ii), 15, 90, 192, Art. 4(1), 25]
   

   Authority held that Employees of Indian company sent on assignments, employees resident of those countries and liable to tax on their worldwide income in those countries for period of their assignment income did not accrue in India and not chargeable to tax in India Indian Company is not liable to deduct tax on salaries paid in India. Once employees returned and became residents Indian Company can give credit for taxes deducted during deputation outside India. When payments were received from more than one source during a particular year, the present employer could give credit for the taxes deducted during his deputation outside India. In the absence of any other provision, recourse to the specific provision in S.192(2) alone was possible. This provision cast an obligation on the employee to furnish to the employer, the applicant, such details of the salary, etc., received by him from the other employer, the tax paid or deducted therefrom, and other particulars, and the employer would examine and take into account such details before computing the tax deductible.

   Texas Instruments (India) Pvt. Ltd., In Re (2018) 401 ITR 289 (AAR)

3. S.9(1)(i) : Income deemed to accrue or arise in India – Business connection – Title in equipment imported transferred outside India – Delivery of equipment outside India and consideration for supply of plant and equipment paid in Euros to Bank outside India – Not liable to deduct tax at source
   

   AAR held that title in equipment imported transferred outside India delivery of equipment outside India and consideration for supply of plant and equipment paid in Euros to Bank outside India therefore the applicant is not liable to deduct tax at source.

   Michelin Tamil Nadu Tyres P. Ltd., In Re (2018) 401 ITR 164 (AAR) (HC)

4. S.9(1)(i) : Income deemed to accrue or arise in India – Business connection – Technical and equipment and services for events – DTAA – India – Belgium – Portugal [Ss.9(1)(vii), 90, Art. 7, 12]
   

   Applicant provided with exclusive office space as well as on-site space and lockable space for storing tools and equipment, identifiable place of business at its disposal, constitutes permanent establishment therefore income from activity is chargeable to tax in India as business profits.

   Organising committee of commonwealth games not acquiring know-how or ability to use it. “Make Available” clause is not satisfied. Income does not constitute royalty hence income is not taxable as fees for technical services

   Production Resource Group, In Re v. (2018) 401 ITR 256 (AAR)

5. S.48 : Capital gains – Computation – Expenses incurred towards fees for computerisation of share certificates in order to transfer them to escrow account is allowable as deduction. [S.45, 112]
   

   AAR held that expenses incurred towards fees for computerisation of share certificates in order to transfer them to escrow account is allowable as deduction.

   Honda Motors Co. Ltd., In Re (2018) 401 ITR 382 /253 Taxman 402/301 CTR 159/163 DTR 113 (AAR)

6. S.54 : Capital gains – Profit on sale of property used for residence – Investment in residential house outside India was held eligible for exemption (Prior to amendment with effect from 1-4-2015 by Finance (No. 2) Act, 2014) [S. 45, 54F]
   

   Allowing the application AAR held that, Investment in residential house outside India was held eligible for exemption (Prior to amendment with effect from 1-4-2015 by Finance (No. 2) Act, 2014). Amendment is not retrospective. As regards the period of holding would be determined from the period from which property was held by the applicant’s father, indexation was to be allowed on 1-4-1981.

   Dipankar Mohan Ghosh, In Re 2018] 401 ITR 129 (AAR) (HC)

7. S.90 : Double taxation avoidance – Income deemed to accrue or arise in India – Capital gains – Transfer of shares by German individuals to German Company – Not liable to deduct tax at source – DTAA – India – Germany. [Ss. 45, 90, 195, Art. 13]
   

   Allowing the application the AAR held that transfer of shares by German individuals to German Company is not chargeable to tax in India hence not liable to deduct tax at source. That the liability to deduct tax at source arises only if the sum paid was chargeable to tax. In cases where income is not chargeable to tax under the Act, as per expressions used in section 195 itself, there will be no obligation to withhold tax. There was no obligation on an applicant to withhold tax in a case, as the one in hand, where the gains arising from the alienation of shares were not chargeable to tax in India.

   Gea Refrigeration Technologies Gmbh (2018) 401 ITR 115 / 163 DTR 145 (AAR) (HC)

8. S.90 : Double taxation relief – Non-resident – Assessee is not operating as independent entity – Assessee is not entitled to benefit of double taxation avoidance agreement between India and Mauritius – Transaction was held to be liable to tax in India and tax to be withheld – DTAA – India –Mauritius-USA [S. 195, Art. 13]
   

   Assessee incorporated in Mauritius as Investment Company for investment in particular sector in India. Acquiring shares in Indian Company from two U.S. sellers under share purchase agreement. Assessee shown as party to agreement but consideration paid and all decisions taken by U.S. holding Company . Assessee is not operating as independent entity. Shares in Indian company to be treated as held benami. Actual owner of shares U.S. holding company. Sale of shares to another non-resident group company. Assessee is not entitled to benefit of double taxation avoidance agreement between India and Mauritius. Transaction was held to be liable to tax in India and tax to be withheld.

   By the authority : (i) “The existence of a separate and independent status of a subsidiary in another territory is the core basis and foundation of the application of treaty law across the globe. Tax treaties throughout the world function on the premise that the subsidiary is an independent legal entity, different from its parent, even though controlled by it. However, in a case where the parent acts on behalf of its subsidiary and takes all its decisions, the corporate veil between the company’s subsidiary and its parent stands torn, not at the instance of the Revenue, but by the conduct of the group itself.”

   Authority also held that a mere accounting entry without the actual flow of money or other consideration must be made subservient to the actual transaction.

   “AB” Mauritius, In Re (2018) 402 ITR 311 (AAR)

9. S.90 : Double taxation avoidance agreement – Non-resident – Capital gains, arising from sale of shares in Indian Company to group company in Singapore is not liable to tax in India – DTAA – India-Mauritius [S. 195, Art. 13]
   

   Assessee is not a benami of holding Company or set up for tax avoidance. Transfer of shares in Indian company to Singapore Company as part of business reorganisation. Assessee is entitled to benefits of the Double Taxation Avoidance Agreement between India and Mauritius. Capital gains arising from sale of shares in Indian company to group company in Singapore is not liable to tax In India. S. 195 is applicable only if income chargeable to tax in payment.

   Ab Holdings, Mauritius-Ii, In Re. (2018) 402 ITR 37 (AAR)

10. S.92 : Transfer Pricing – International transactions – Arm’s length price – Transaction of sale of shares in Indian company to be benchmarked under transfer pricing provisions [Ss. 92A to 92F]
    

    No requirement that transaction should result in income chargeable to tax for transfer pricing provisions to get attracted. Transaction of sale of shares in Indian company to be benchmarked under transfer pricing provisions.

    “AB” Mauritius, In Re (2018) 402 ITR 311 (AAR)

11. S.92 : Transfer Pricing –International transactions – Arm’s length price – Transaction of sale of shares in Indian company to be benchmarked under transfer pricing provisions [Ss. 92A to 92F]
    

    No requirement that transaction should result in income chargeable to tax for transfer pricing provisions to get attracted. Transaction of sale of shares in Indian company to be benchmarked under transfer pricing provisions.

    Ab Holdings, Mauritius-Ii, In Re (2018) 402 ITR 37 (AAR)

12. S.112 : Tax on long term capital gains – Foreign company on long-term capital gains arising on sale of equity shares of an Indian company being listed in securities, will be 10 per cent (plus surcharge and cess) of amount of capital gains as per proviso to S.112(1)-DTAA – India-Japan [S.45, Arts. 4, 13]
    

    Question before AAR was whether the tax payable by the applicant on the long term capital gains arising on the sale of equity shares being listed securities, will be 10% (plus surcharge and cess) of the amount of capital gains as per the proviso to S. 112(1) of the Act.

    AAR granted benefit of proviso to S. 112(1) to the applicant and upheld 10% tax rate for long-term capital gains arising on sale of listed shares pursuant to share transfer agreement with Indian partners in order to sell its stake in HHML by placing reliance upon Delhi High Court ruling in Cairn UK Holding Ltd. (2013) 359 ITR 268 (Delhi ) (HC) and AAR ruling in Pan-Asia iGate Solutions (2014) 364 ITR 331 (AAR).

    Honda Motors Co. Ltd., In Re (2018) 401 ITR 382/ 253 Taxman 402/ 301 CTR 159 /163 DTR 113 (AAR)

13. S.112 : Tax on long term capital gains – Non-residents – Concessional rate of tax – Long-term capital gains arising on sale of equity shares in Indian listed company to be taxed at 10.506 per cent, inclusive of surcharge and cess [S. 45]
    

    Allowing the application AAR held that the benefit under the proviso to section 112(1) of the Act could not be denied to the applicant. The tax payable by the applicant on the long-term capital gains arising on the sale of equity shares in A, an Indian listed company, were to be computed at 10.506 per cent inclusive of surcharge and cess of the amount of capital gains, in terms of the proviso to section 112(1) of the Act.

    Finnish Fund for Industrial Co-operation Ltd., In Re (2018) 402 ITR 373 (AAR)

14. S.115JB : Book profit – Not applicable to foreign companies
    

    The provisions of S.115JB shall not be applicable to foreign companies , in terms of the retrospective amendment to S.115JB by the Finance Act, 2016 and the clarification issued by the Board dated September 24, 2015.

    “AB” Mauritius, In Re (2018) 402 ITR 311 (AAR)

15. S.115JB : Book Profit – Not applicable to foreign companies
    

    The provisions of S.115JB shall not be applicable to foreign companies, in terms of the retrospective amendment to S. 115JB by the Finance Act, 2016 and the clarification issued by the board dated September 24, 2015

    Ab Holdings, Mauritius-Ii, In Re. (2018) 402 ITR 37 (AAR)

16. S.192 : Salary – Deduction at source – Non-Resident – Employees rendering services on deputation at USA and Germany on assignment basis – Not liable to tax in India as services were rendered there hence not liable to deduct tax at source – DTAA – India-USA-Germany [Ss. 2(45)4, 5(2), 9(i)(ii), 90, 192, 195, Arts. 25, 23]

AAR held that, employees of Indian company sent on assignments to render services in U. S. A. and Germany to companies, income earned from services rendered in those countries chargeable to tax there, and not in India, during period of assignment hence the Indian company is not liable to deduct tax on salaries paid in India. Employees resident of those countries and liable to tax on their worldwide income in those countries for period of their assignment income did not accrue in India and not chargeable to tax in India.

Hewlett Packed India Software Operation P. Ltd. In, re/ 162 DTR 337 (2018) 401 ITR 339 (AAR) (HC)