2016 (1) TMI 1126 - HC - Income Tax

Income deemed to accrue or arise in India - tax liability - Agreement for Avoidance of Double Taxation between India and Korea - PE in India - Held that - The point sought to be urged is covered against the Revenue by two decisions of this Court concerning the same Assessee Director of Income Tax v. LG Cables Ltd. (2010 (12) TMI 948 - Delhi High Court ) and Director of Income Tax v. L. S. Cables Ltd. ( 2011 (9) TMI 482 - DELHI HIGH COURT ) wherein held mere existence of a PE could not constitute sufficient business connection to take the PE as a taxable entity more so as the cl. (a) of Expln. 1 to s. 9(1)(i) of the Act emphasizes that only such part of the income as is attributable to the operations carried out in India could be taxed in India - In the instant case there was no operation qua the agreement for supply of equipment which was carried but in India and therefore no income could be deemed to have accrued or arisen in India whether directly or indirectly or through any business connection in India - Decided in favour of assessee

Summary

The High Court of Delhi dismissed a writ petition by the Revenue challenging an order dated 26th July, 2011 passed by the Authority for Advance Ruling. The challenge was covered against the Revenue by two previous decisions of the Court concerning the same Assessee.