9911796707
TMI Blog2008 (8) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Present for the Department : Ms. Shivani Singh, Addl.CIT, Range-2 (Intl. Taxn), New Delhi. Present for the Applicant : Mr. Joesph Quandrews, CA, Mr.J.Hoon Lee, Chief Representative of the applicant. RULING [By Mr. Justice P. V. Reddi (Chairman) ] - 1. The Small Business Corporation (for short 'SBC') is an undertaking of the Korean Government which assists small enterprises for the purpose of promotion of small and medium size business organizations in various ways, having its office in Seoul. Articles of incorporation of SBC has been filed alongwith the application. SBC has opened liaison office in India at Gurgaon after obtaining the permission from the RBI. RBI in its letter dated 24.1.2007 stipulated among ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who (i) is a national of that State: or (ii) did not become a resident of that State solely for the purpose of rendering the services. 2. (a) Any pension paid by or out of funds created by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. (b) x x x x x x x x 4. The provisions of paragraph (1) of this article shall like-wise apply in respect of remuneration or pensions paid, in the case of Korea, by the Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant, the applicant could not also produce any material to substantiate that salary is being drawn out of the Government funds. It is seen from the articles of Incorporation that SBC creates and manage its own funds, it has annual budget for gross income and outlays including the fund operation and management plan and the budget plan shall be approved by the Administrator of S.B Administration. All this will lead to the conclusion prima facie that the SBC, which is a State managed Corporation, pays the remuneration to Mr. Ji Hoon Lee employed in its liaison office in India out of its own funds. 4. In an apparent bid to establish that the source of salary payment to Mr. Hoon Lee is the Government funds placed at the disposal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the affidavit that the Government through SMBA makes contribution to SME fund every year. It is not known whether the fund managed by SMBA is generated from other sources as well. The contribution by the Government may or may not be exclusive source of funding. That apart, the money deployed in the Fund, from whatever source it comes, would belong to the applicant, SBC only, which is a corporate entity. It can be mixed up with other funds received from other sources and utilized by SBC for various purposes. It is a different matter if the Government while sanctioning the contribution makes the allocation specifically for the personnel expenses incurred by SBC. The statement in the affidavit quoted above is not at all clear on this aspect. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial before the assessing authority to substantiate what has been observed by us, the assessing authority is free to take an independent decision. Subject to this observation, the ruling is given against the applicant and the question is answered in the negative. 7. Before closing the case, we would like to advert to the stand taken by the Director of Income-tax (International Taxation), Delhi, in his comments and reiterated before us in the course of hearing. It is submitted that article 20(4) extended the benefit of Art. 20(1) only to three entities and therefore the other business undertakings of the Government like the applicant cannot claim the benefit of article 20(1). In our view, this contention, though plausible, cannot be su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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