DIT v. Morgan Stanley & Co.

292 ITR 416Supreme Court of India2007#210 most cited

What is DIT v. Morgan Stanley & Co. authority for?

A Permanent Establishment (PE) signifies a foreign enterprise's virtual projection into another country, with a fixed place PE existing where an MNE's business is wholly or partly carried on. A dependent agent PE requires the agent to act as such and/or have the authority to conclude contracts for the foreign enterprise under DTAA provisions.

360

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2011 to 2026.

Also referred to as

DIT v. Morgan Stanley & Co. · Morgan Stanley PE · 292 ITR 416 · Permanent Establishment DTAA · fixed place PE · dependent agent PE · Article 5 India-USA DTAA · authority to conclude contracts PE · outsourcing MNE · service PE · agency PE

Sections most often in play

Section 143(3)Section 234BSection 144C(13)Section 234ASection 270ASection 9(1)(vi)Section 271(1)(c)Section 5
Read the full judgment

Issues it is cited on

dependent agent peinstallation peagency peservice pefixed place peuse of equipmentprofit split methodsection 44dfunctional analysisfar analysismake available clausesection 44bb

Judgments citing DIT v. Morgan Stanley & Co.

M/S. Nortel Networks India International Inc vs. The Director of Income Tax-I

ITA/669/2014HC Delhi04 May 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 143(3)Section 147Section 260A

…ITA 666/2014 & Ors. Page 1 of 57 IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 04.05.2016 + ITA 666/2014 M/S NORTEL NETWORKS INDIA INTERNATIONAL INC. ..... Appellant Through: Mr. Deepak Chopra, Advocate with Ms. Manasvini Bajpai, Advocate. versus THE DIRECTOR OF INCOME TAX -I ..... Respondent Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Advocate.…

Nortel Networks India International Inc vs. The Director of Income Tax-I

ITA/673/2014HC Delhi04 May 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 143(3)Section 147Section 260A

…ITA 666/2014 & Ors. Page 1 of 57 IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 04.05.2016 + ITA 666/2014 M/S NORTEL NETWORKS INDIA INTERNATIONAL INC. ..... Appellant Through: Mr. Deepak Chopra, Advocate with Ms. Manasvini Bajpai, Advocate. versus THE DIRECTOR OF INCOME TAX -I ..... Respondent Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Advocate.…

Nortel Networks India International Inc vs. The Director of Income Tax-I

ITA/667/2014HC Delhi04 May 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 143(3)Section 147Section 260A

…ITA 666/2014 & Ors. Page 1 of 57 IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 04.05.2016 + ITA 666/2014 M/S NORTEL NETWORKS INDIA INTERNATIONAL INC. ..... Appellant Through: Mr. Deepak Chopra, Advocate with Ms. Manasvini Bajpai, Advocate. versus THE DIRECTOR OF INCOME TAX -I ..... Respondent Through: Mr. N.P. Sahni, Senior Standing counsel with Mr. Nitin Gulati, Advocate.…

DCIT, New Delhi vs. M/S Vertex Customer Management Ltd., New Delhi

In the result Appeal no 3368/del/2013 of assessee is partly allowed

ITA 3759/DEL/2013[2004-05]Status: DisposedITAT Delhi04 Mar 2016AY 2004-05

Bench: Shri I.C.Sudhir & Shri Prashant Maharishidcit, Vertex Customer Management Ltd., Circle-3(2), C/O. Price Waterhouse Coopers, Vs. New Delhi 11A, Vishnu Digamber Marg, Sucheta Bhawan, New Delhi Pan:Aabcv9414D (Appellant) (Respondent) Vertex Customer Management Ltd., Dcit, C/O. Pricewaterhouse Coopers, Circle-3(2), Vs. 11A, Vishnu Digamber Marg, Sucheta New Delhi Bhawan, New Delhi Pan:Aabcv9414D Dcit, Circle-3(2), New Delhi (Appellant) (Respondent)

For Appellant: Sh.Ravi Sharma, CAFor Respondent: Smt. Anshu Prakash, Sr. DR
Section 234BSection 9(1)(i)

…given access for the purposes of the work and hence disposal test is not satisfied in this case. Further nature of services provided by the assessee is BPO services and back office operations. Honorable supreme court in case of DIT V Morgan Stanley & co Inc. 292 ITR 416 (SC) in case of whether back office services constitute permanent Establishment or not under article 5(1) of The DTAA has held as under “Existence of P.E. in India 6. With globalization, many economic activities spread over to several tax jurisdiction. This is where the concept of P.E. becomes important under article 5(1). There exists a P.E. if…

Director of Income Tax-II vs. Western Union Financial Services Inc

ITA/126/2016HC Delhi12 Feb 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

…er. If looked at from that point of view, then, no activity could be construed as preparatory or of an ―auxiliary‖ character. On this aspect of the matter, the Supreme Court in the case of DIT (International Taxation) v. Morgan Stanley and Co. Inc. [2007] 292 ITR 416 ; [2007] 7 SCC 1 amongst other issues was called upon to decide as to whether back office operations carried on by Morgan Stanley Company for one of its Morgan Stanley Advantages Services Pvt. Ltd. would qualify as having a permanent establishment in India. The Supreme Court, while holding that back office operations fall within the exclusi…

Director of Income Tax -II vs. M/S National Petroleum Construction Co

The appeals are disposed of in the above terms

ITA/795/2014HC Delhi29 Jan 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 260A

…remitters. This Court held that the said activity was only in aid and support of the main activity of the Assessee in that case and, thus, such activity was auxiliary in character. In DIT (International Taxation) v. Morgan Stanley & Company Inc.: (2007) 292 ITR 416 (SC), the Supreme Court held that the back office operations carried on at an office would fall within the exclusionary clause of Article 5(3)(e) of the Treaty between India and United States which is also identically worded as Article 5(3)(e) of the DTAA. 28. The Black's Law Dictionary defines the word 'auxiliary' to mean as "aiding or s…

National Petroleum Construction Company vs. Director of Income Tax

The appeals are disposed of in the above terms

ITA/143/2013HC Delhi29 Jan 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 260A

…remitters. This Court held that the said activity was only in aid and support of the main activity of the Assessee in that case and, thus, such activity was auxiliary in character. In DIT (International Taxation) v. Morgan Stanley & Company Inc.: (2007) 292 ITR 416 (SC), the Supreme Court held that the back office operations carried on at an office would fall within the exclusionary clause of Article 5(3)(e) of the Treaty between India and United States which is also identically worded as Article 5(3)(e) of the DTAA. 28. The Black's Law Dictionary defines the word 'auxiliary' to mean as "aiding or s…

Director of Income Tax - II (International Taxation) vs. National Petroleum Construction Company

The appeals are disposed of in the above terms

ITA/533/2013HC Delhi29 Jan 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 260A

…remitters. This Court held that the said activity was only in aid and support of the main activity of the Assessee in that case and, thus, such activity was auxiliary in character. In DIT (International Taxation) v. Morgan Stanley & Company Inc.: (2007) 292 ITR 416 (SC), the Supreme Court held that the back office operations carried on at an office would fall within the exclusionary clause of Article 5(3)(e) of the Treaty between India and United States which is also identically worded as Article 5(3)(e) of the DTAA. 28. The Black's Law Dictionary defines the word 'auxiliary' to mean as "aiding or s…

National Petroleum Construction Company vs. Director of Income Tax

The appeals are disposed of in the above terms

ITA/144/2013HC Delhi29 Jan 2016

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU

Section 260A

…remitters. This Court held that the said activity was only in aid and support of the main activity of the Assessee in that case and, thus, such activity was auxiliary in character. In DIT (International Taxation) v. Morgan Stanley & Company Inc.: (2007) 292 ITR 416 (SC), the Supreme Court held that the back office operations carried on at an office would fall within the exclusionary clause of Article 5(3)(e) of the Treaty between India and United States which is also identically worded as Article 5(3)(e) of the DTAA. 28. The Black's Law Dictionary defines the word 'auxiliary' to mean as "aiding or s…

Director of Income Tax - II (International Taxation) vs. National Petroleum Construction Company

The appeals are disposed of in the above terms

ITA - 533 / 2013HC Delhi29 Jan 2016
Section 260A

…remitters. This Court held that the said activity was only in aid and support of the main activity of the Assessee in that case and, thus, such activity was auxiliary in character. In DIT (International Taxation) v. Morgan Stanley & Company Inc.: (2007) 292 ITR 416 (SC), the Supreme Court held that the back office operations carried on at an office would fall within the exclusionary clause of Article 5(3)(e) of the Treaty between India and United States which is also identically worded as Article 5(3)(e) of the DTAA. 28. The Black's Law Dictionary defines the word 'auxiliary' to mean as "aiding or s…

ACIT, New Delhi vs. M/S. Radware Ltd, New Delhi

In the result, the appeal filed by the Revenue stands dismissed

ITA 3099/DEL/2009[2005-06]Status: DisposedITAT Delhi21 Jan 2016AY 2005-06

Bench: Shri N.K. Saini & Smt. Beena Pillai

Section 142(1)Section 143(2)

…he Indo Israel DTAA. The ld. AR has placed his reliance upon the following judgments: i. UAE Exchange Centre Ltd. vs. Union of India & Anr. reported in (2009) 313 ITR 94; ii. Director of Income Tax (International Taxation) vs. Morgan Stanley & Co. Inc. (2007) 292 ITR 416 (SC); iii. Mitsui & Co. Ltd. vs. ACIT (International Taxation) (2008) 4 DTR 356; iv. Western Union Financial Services Inc. vs. ADIT (2007) 104 ITD 34 (Del.); v. Gutal Trading Est., In RE (2005) 278 ITR 643 (AAR); vi. Inspecting Asstt. Commissioner vs. Mitsui & Co. Ltd. (1991) 41 TTJ (Del) (Spl. Bench) 569. 7. The ld. DR on the contrary, submitted…

Ngc Network Asia Llc, Mumbai vs. Jdit (It) RG 4, Mumbai

In the result, both the appeals filed by the assessee are treated as partly allowed for statistical purposes

ITA 7631/MUM/2012[2008-09]Status: DisposedITAT Mumbai16 Dec 2015AY 2008-09

Bench: S/Shri B.R.Baskaran (Am) & Amit Shukla, (Jm) सर्वश्री बी.आर.बास्करन, ऱेखा सदस्य एवं अमित शुक्ऱा, न्याययक सदस्य के समक्ष आमकय अऩीर सं./I.T.A. No.7994/Mum/2011 & Ita No.7631/Mum/2012 (ननधधायण वषा / Assessment Year :2007-08 & 2008-09) बनाम/ Ngc Network Asia Llc, Joint Director Of Income Tax C/O S R Batliboi & Co., (International Taxation), Vs. 14Th Floor, The Ruby, Range-4, Senapati Bapat Marg, Scindia House, Tulsi Pipe Road, Ballard Estate, Dadar (W), Mumbai-400038. Mumbai-400028 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) .. स्थधमी रेखध सं./जीआइआय सं./Pan: Aabcn3136G अऩीरधथी ओय से / Appellant By Shri Porus Kaka & Ms.Sheetal Shah प्रत्मथी की ओय से/Rspondent By Ms.Vandana Sagar सुनवधई की तधयीख / Date Of Hearing : 4.9.2015 घोषणध की तधयीख /Date Of Pronouncement : 16.12.2015 आदेश / O R D E R Per B.R. Baskaran (Am) These Are The Two Appeals Filed By The Assessee Against The Assessment Orders Passed For Assessment Years 2007-08 & 2008-09 In Pursuance Of Directions Issued By The Dispute Resolution Panel (Drp). Since Issues Urged In These Two Appeals Are Identical In Nature, They Are Being Disposed Of By This Common Order, For The Sake Of Convenience.

Section 9(1)(vi)

…assessee has paid commission to NGC India at arms length basis, no further income can be attributed to the assessee. In this regard, the assessee placed reliance on the decision rendered by Hon‟ble Supreme Court in the case of DIT Vs. Morgan Stanley and Co. (292 ITR 416) and the Hon‟ble Bombay High Court in the case of SET Satellite (Singapore) Pte Ltd (supra). 7. The assessing officer examined the nature of activities carried on by NGC India and also explanations furnished by the assessee. The 6 And ITA No.7631/Mum/12 submissions made by the assessee and the observations of the AO are extracted below:- “Further…

M/S Foodworld Supermarkets Ltd., Bangalore vs. Dy. DIT, Bangalore

In the result, the appeal filed by the assessee is partly allowed

ITA 1356/BANG/2013[2008-09]Status: DisposedITAT Bangalore28 Oct 2015AY 2008-09

Bench: Shri Vijaypal Rao & Shri Jason P Boazita Nos.1356 & 1357/Bang/2013 (Asst. Year – 2008-09) M/S Food World Supermarkets Ltd., No.740, Eshwari Industrial Estate, Gate No.2, Hulimavu, Bannergatta Road, Bangalore-560 076. . Appellant Vs. The Dy. Director Of Income-Tax, (International Taxation) Circle-I(1), Bangalore. . Respondent Appellant By : Shri Padam Chand Khincha, Ca Respondent By : Shri Saravanan B, Jcit Date Of Hearing : 15-09-2015 Date Of Pronouncement : 28-10-2015 O R D E R

For Appellant: Shri Padam Chand Khincha, CAFor Respondent: Shri Saravanan B, JCIT
Section 192Section 195Section 201Section 201(1)Section 9(1)(vii)

…hment (PE) and, therefore, only the net of the expenditure would be chargeable to tax as per the provision of sec. 44D of the Act. In support of his contention, he has relied upon the judgment of Hon’ble SC in the case of CIT Vs. Morgan Stanley and Co. Inc., 292 ITR 416 and submitted that while interpreting the definition of PE as provided u/s 92F(iii) as well as considering the CBDT Circular 14 of 2001 the Hon’ble SC has observed that the definition of PE covers services PE, agency PE, Software PE, construction PE etc. Thus, the learned AR has submitted that even in the case of the payment in question is treat…

Commissioner of Income Tax (TDS) vs. M/s Country Club Inda Limited

ITTA/667/2014HC Telangana29 Jan 2015

Director of Income Tax vs. E Funds It Solution

The appeals are disposed of

ITA - 735 / 2011HC Delhi05 Feb 2014

…as been lucidly elucidated by the Supreme Court in DIT versus Morgan 2014:DHC:702-DB ITA No. 735/2011+connected appeals Page 17 of 102 Stanley and Co. Inc., (2007) 292 ITR 416 (SC) in the following words:- ―32. The object behind enactment of transfer pricing regulations is to prevent shifting of profits outside India. Under Article 7(2) not all profits of MSCO would be taxable in India but only those which have economic nexus with PE in India. A foreign enterprise is liable to be taxed in India on so much of its…

Director of Income Tax vs. M/S E Funds It Solution

The appeals are disposed of

ITA/735/2011HC Delhi05 Feb 2014

…as been lucidly elucidated by the Supreme Court in DIT versus Morgan 2014:DHC:702-DB ITA No. 735/2011+connected appeals Page 17 of 102 Stanley and Co. Inc., (2007) 292 ITR 416 (SC) in the following words:- ―32. The object behind enactment of transfer pricing regulations is to prevent shifting of profits outside India. Under Article 7(2) not all profits of MSCO would be taxable in India but only those which have economic nexus with PE in India. A foreign enterprise is liable to be taxed in India on so much of its…

Director of Income Tax vs. Bbc Worldwide Ltd

ITA/1341/2010HC Delhi30 Sept 2011

Bench: CASES PERTAINING TO SPL.DIVISION BENCHES

Section 92C

….5.1996 wherein it was recognised that the advertising agent of the foreign telecasting companies in India usually retains service charges @ 15% or so of the gross amount and this Circular had been taken note of in DIT Vs. Morgan Stanley and Company Inc., 292 ITR 416 (SC). 8. These submissions of the assessee convinced the Tribunal. The Tribunal did not go into the issue of business connection or permanent establishment, which was not addressed before it and confined itself to the issue as to whether the BWIPL had been adequately remunerated on the basis of Transfer Pricing. There is no dispute th…

CIT vs. Bbc Worldwide Ltd

ITA - 705 / 2011HC Delhi30 Sept 2011
Section 92C

…d 02.5.1996 wherein it was recognised that the advertising agent of the foreign telecasting companies in India usually retains service charges @ 15% or so of the gross amount and this Circular had been taken note of in DIT Vs. Morgan Stanley and Company Inc., 292 ITR 416 (SC). These submissions of the assessee convinced the Tribunal. The Tribunal did not go into the issue of business connection or permanent establishment, which was not addressed before it and confined itself to the issue as to whether the BWIPL had been adequately remunerated on the basis of Transfer Pricing. There is no dispute that if answer t…

Director of Income Tax vs. Bbc Worldwise Ltd

ITA-1341/2010HC Delhi30 Sept 2011
Section 92C

….5.1996 wherein it was recognised that the advertising agent of the foreign telecasting companies in India usually retains service charges @ 15% or so of the gross amount and this Circular had been taken note of in DIT Vs. Morgan Stanley and Company Inc., 292 ITR 416 (SC). 8. These submissions of the assessee convinced the Tribunal. The Tribunal did not go into the issue of business connection or permanent establishment, which was not addressed before it and confined itself to the issue as to whether the BWIPL had been adequately remunerated on the basis of Transfer Pricing. There is no dispute th…

Rolls Royce Singapore Pvt. Ltd vs. Assistant Director of Income Tax

The appeals of the assessee are partly allowed to the

ITA-1278/2010HC Delhi30 Aug 2011

…ITA 1278/2010,ITA 1280/2010,ITA 1281/2010,ITA 1282/2010 Page 1 of 55 ITA 1284/2010,ITA 249/2011,ITA 250/2011,ITA 251/2011 ITA 252/2011,ITA 253/2011,ITA 254/2011,ITA 255/2011 ITA 256/2011,ITA 257/2011,ITA 258/2011,ITA 259/2011, ITA 260/2011 REPORTABLE * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 1278/2010,ITA 1280/2010 ITA 1281/2010,ITA 1282/2010 ITA 1284/2010,ITA 249/2011 ITA 250/2011,ITA 251/2011 ITA 252/2011,ITA 253/2011 ITA 254/2011,ITA 255/2011 ITA 256/2011,ITA 257/2011 ITA 258/2011,ITA 259/2011 ITA 260/2011 % Judgment Reserved…