CASE LAW

2016-TII-146-ITAT-DEL-INTL

ZTE CORPORATION Vs ADDL DIT: DELHI ITAT (Dated: May 30, 2016)

Income tax - Sections 9(1)(vi), 133A, 139, 148 & 234B - India-China DTAA - Articles 7 & 12(3).

Keywords - ALP - attributable profit - business connection - embedded software - fixed service PE - installation PE - reopening - royalty - right to use - supply of telecom equipment.

Whether where the assessee has not maintained any books of a/c relating to its PE in India, it is open to the Revenue to resort to indirect method as prescribed in Rule 10 for attribution of profits - YES: ITAT

Whether the issue of attribution of profits depends on the facts of a particular case and on the level of operations of the activities carried out in India - YES: ITAT

Whether the functions performed by an Indian entity comprising of preparatory work, negotiation of contract & price and answering of specified queries of the customers on behalf of the non-resident assessee, are revenue generating functions, and hence it can be concluded that almost entire sales functions of such assessee were carried out by PE in India - YES: ITAT

Whether attribution of business profits is warranted in a case, where post sale activities performed by the Indian PE has surfaced only on account of survey operations carried u/s 133A - YES: ITAT

Whether receipts from supply of 'embedded software' in the telecom equipment or the mobile handsets to the customers, would amount to 'business income' and not 'royalty' u/s 9(1)(vi) - YES: ITAT

Assessee's appeal partly allowed

FATCA NOTIFICATION

FATCA - Amendment in Rule 114F to exclude withholding foreign trust from ambit of US reportable account; substitutes Form No 61B