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“business connection”

International TaxSection 9(1)(i)Section 9(1)(i)833 judgments

The decision most relied on for business connection is Ishikawajima Harima Heavy Industries Ltd. v. DIT (288 ITR 408), cited in 394 judgments on BharatTax.

Leading authorities on business connection

Ishikawajima Harima Heavy Industries Ltd. v. DIT
288 ITR 408 · 2007 · Supreme Court
394
citing judgments

Income from offshore supply of goods and services is not taxable in India if the entire transaction, including transfer of ownership and payments, occurs outside India.

CIT v. Toshoku Ltd.
125 ITR 525 · 1980 · Supreme Court
270
citing judgments

A non-resident commission agent is not chargeable to tax in India on commission income if no business operations are carried out in India. Consequently, no TDS is required under Section 195 on such payments.

Transmission Corporation of Andhra Pradesh v. CIT
239 ITR 587 · 1999 · Supreme Court
243
citing judgments

The Supreme Court lays down principles for deducting tax at source (TDS) under Section 195 on payments to non-residents, including aspects of income deemed taxable in India and the application of Double Taxation Avoidance Agreements (DTAAs) under Section 90.

Motorola Inc. v. Dy. CIT
95 ITD 269 · 2005 · High Court
213
citing judgments

Revenue must demonstrate the existence of a Permanent Establishment (PE) of a foreign enterprise in India, including establishing that transactions underlying a Dependent Agent PE were not at arm's length. Income from the sale of goods is not taxable in India if title and risk in the goods pass outside India.

CIT v. R.D. Aggarwal and Co.
56 ITR 20 · 1965 · Supreme Court
156
citing judgments

A 'business connection' for non-residents requires a real and intimate relation between their trading activities outside India and activities within India, contributing directly or indirectly to their earnings. The Supreme Court assigned a wide meaning to this term.

CIT v. Faizan Shoes (P.) Ltd.
367 ITR 155 · 2014 · High Court
139
citing judgments

Disallowance under section 40(a)(i) for non-deduction of tax at source on export agency commission paid to a non-resident does not apply if the non-resident's income is not taxable in India under section 9(1), such as when the agent operates outside India without a permanent establishment or business connection in India.

Set Satellite Pte Ltd. v. CIT
307 ITR 205 · 2008 · High Court
96
citing judgments

If a Dependent Agency Permanent Establishment (DAPE) is remunerated at arm's length based on transfer pricing principles, no further profits can be attributed to the foreign enterprise. The principles of profit attribution under DTAA Article 7 are pari-materia to Section 9(1)(i) of the Income Tax Act.

IT Solution Inc. v. ADIT
86 Taxmann.com 240 · 2017 · Supreme Court
73
citing judgments

Once the arm's length principle has been satisfied under transfer pricing provisions, no further profit can be attributed to a person even if they have a permanent establishment in India. A reassessment notice based solely on the allegation of a permanent establishment is unsustainable if the arm's length price procedure has been followed.

Judgments citing business connection

United India Insurance Co. Ltd., Chennai vs. DCIT Corporate Circle 3(2), Chennai

In the result, the appeals of the assessee and Revenue are

ITA 1584/CHNY/2019[2015-16]Status: DisposedITAT Chennai19 Jul 2024AY 2015-16

Bench: Shri Mahavir Singh, Vice- & Shri Amitabh Shukla

For Appellant: Ms. V.Pushpa, Sr.Standing
Section 14ASection 195Section 40

Acton account of the fact that said commission has arisen and accrued to non-residents only in India and there is also there is business connection between the assessee and non-resident insurance companies. However, on appeal, the Ld.CIT(A) by following decision of the Tribunal in assessee ... damage or claim, surveyors examined the insured property and estimated damages and entire services were outside India and the non-residents have no business connection in India. Further, the income of the surveyors is not liable for taxation in India, thus, the assessee is not liable to deduct tax, which

DCIT Corporate Circle 3(2), Chennai vs. United India Insurance Co. Ltd., Chennai

In the result, the appeals of the assessee and Revenue are

ITA 1571/CHNY/2017[2013-14]Status: DisposedITAT Chennai19 Jul 2024AY 2013-14

Bench: Shri Mahavir Singh, Vice- & Shri Amitabh Shukla

For Appellant: Ms. V.Pushpa, Sr.Standing
Section 14ASection 195Section 40

Acton account of the fact that said commission has arisen and accrued to non-residents only in India and there is also there is business connection between the assessee and non-resident insurance companies. However, on appeal, the Ld.CIT(A) by following decision of the Tribunal in assessee ... damage or claim, surveyors examined the insured property and estimated damages and entire services were outside India and the non-residents have no business connection in India. Further, the income of the surveyors is not liable for taxation in India, thus, the assessee is not liable to deduct tax, which

United India Insurance Co. Limited, Chennai vs. ACIT, Chennai

In the result, the appeals of the assessee and Revenue are

ITA 1085/CHNY/2017[2013-14]Status: DisposedITAT Chennai19 Jul 2024AY 2013-14

Bench: Shri Mahavir Singh, Vice- & Shri Amitabh Shukla

For Appellant: Ms. V.Pushpa, Sr.Standing
Section 14ASection 195Section 40

Acton account of the fact that said commission has arisen and accrued to non-residents only in India and there is also there is business connection between the assessee and non-resident insurance companies. However, on appeal, the Ld.CIT(A) by following decision of the Tribunal in assessee ... damage or claim, surveyors examined the insured property and estimated damages and entire services were outside India and the non-residents have no business connection in India. Further, the income of the surveyors is not liable for taxation in India, thus, the assessee is not liable to deduct tax, which

Ashok Bablani, Mumbai vs. Income Tax Office (Int Tax)-1(2)(1), Mumbai

In the result, appeal of the assessee is allowed on merits

ITA 3281/MUM/2023[2011-12]Status: DisposedITAT Mumbai16 Jul 2024AY 2011-12

Bench: SHRI AMIT SHUKLA (Judicial Member)

Section 133(6)Section 143(3)Section 147Section 148Section 194JSection 9(1)Section 9(1)(vii)

agreement Is termed as "Consultancy Service Agreement entered into on 20th June 2008. 3. The agreement states that by virtue of his/her activities and business connections, the Consultant has a network among companies and individuals who may be potentially interested by the services of BNPPISIPL 4. BNPPISIPL hereby engages ... Technical Services were received by the appellant from BNP Paribas and the source of consultancy fee was in India. Therefore, irrespective of any business connection or Permanent Establishment in India or 7 Shri Ashok Bablani services being rendered in UAE, the consultancy fee deemed to accrue or arise in India

Deputy Commissioner of Income Tax, Central Circle-1(4), Chennai vs. Shri. Moolchand Kiran Kumar Jain, Chennai

In the result, both the appeals of the revenue are dismissed

ITA 6/CHNY/2024[2021-22]Status: DisposedITAT Chennai12 Jul 2024AY 2021-22

Bench: Shri Aby T Varkey, Hon’Ble & Shri S. R. Raghunatha, Hon’Bleआयकरअपीलसं./Ita Nos.: 5 & 6/Chny/2024 िनधा"रणवष" / Assessment Years: 2020-21 & 2021-22 The Dy. Commissioner Of Shri. Moolchandkiran Kumar Income Tax, V. Jain, Central Circle -1(4), No. 123, Usman Road, T.Nagar, Chennai-34. Chennai – 600 017. [Pan:Achpm-2247-E] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ"क"ओरसे/Appellant By : Shri. R. Clement Ramesh Kumar, Cit ""यथ"क"ओरसे/Respondent By : Shri. D. Anand, Advocate सुनवाई क" तारीख/Date Of Hearing : 13.05.2024 घोषणा क" तारीख/Date Of Pronouncement : 12.07.2024 आदेश /O R D E R Per S. R. Raghunatha, Am: These Appeals Are Preferred By The Revenue Against The Common Order Of The Learned Commissioner Of Income Tax (Appeals)-18, (Hereinafter In Short "The Ld.Cit(A)”), Chennai, Dated 15.11.2022 Against The Assessment Order U/S.153A/143(3) Of The Income Tax Act, 1961 (Hereinafter In Short "The Act”) For :-2-: Ita. Nos: 5 & 6/Chny/2024

For Appellant: Shri. R. Clement Ramesh Kumar, CITFor Respondent: Shri. D. Anand, Advocate
Section 132Section 143(3)Section 153ASection 36(1)Section 36(1)(iii)

case of G.E.T. Water Solutions Pvt Ltd vs ACIT (Supra), where the Tribunal after considering relevant facts held that, once the assessee establishes the business connection for commercial expediency, then the assessee is at liberty to deal with its finances, in accordance with its requirements and the AO cannot ... decide its business affairs and direct how to deploy its funds. As long as :-16-: ITA. Nos: 5 & 6/Chny/2024 the assessee establishes the business connection, then it is free to deal with its affairs in accordance with its requirements. In this case, there is no dispute with regard

Deputy Commissioner of Income Tax, Central Circle - 1(4), Chennai vs. Shri. Moolchand Kiran Kumar Jain, Chennai

In the result, both the appeals of the revenue are dismissed

ITA 5/CHNY/2024[2020-21]Status: DisposedITAT Chennai12 Jul 2024AY 2020-21

Bench: Shri Aby T Varkey, Hon’Ble & Shri S. R. Raghunatha, Hon’Bleआयकरअपीलसं./Ita Nos.: 5 & 6/Chny/2024 िनधा"रणवष" / Assessment Years: 2020-21 & 2021-22 The Dy. Commissioner Of Shri. Moolchandkiran Kumar Income Tax, V. Jain, Central Circle -1(4), No. 123, Usman Road, T.Nagar, Chennai-34. Chennai – 600 017. [Pan:Achpm-2247-E] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ"क"ओरसे/Appellant By : Shri. R. Clement Ramesh Kumar, Cit ""यथ"क"ओरसे/Respondent By : Shri. D. Anand, Advocate सुनवाई क" तारीख/Date Of Hearing : 13.05.2024 घोषणा क" तारीख/Date Of Pronouncement : 12.07.2024 आदेश /O R D E R Per S. R. Raghunatha, Am: These Appeals Are Preferred By The Revenue Against The Common Order Of The Learned Commissioner Of Income Tax (Appeals)-18, (Hereinafter In Short "The Ld.Cit(A)”), Chennai, Dated 15.11.2022 Against The Assessment Order U/S.153A/143(3) Of The Income Tax Act, 1961 (Hereinafter In Short "The Act”) For :-2-: Ita. Nos: 5 & 6/Chny/2024

For Appellant: Shri. R. Clement Ramesh Kumar, CITFor Respondent: Shri. D. Anand, Advocate
Section 132Section 143(3)Section 153ASection 36(1)Section 36(1)(iii)

case of G.E.T. Water Solutions Pvt Ltd vs ACIT (Supra), where the Tribunal after considering relevant facts held that, once the assessee establishes the business connection for commercial expediency, then the assessee is at liberty to deal with its finances, in accordance with its requirements and the AO cannot ... decide its business affairs and direct how to deploy its funds. As long as :-16-: ITA. Nos: 5 & 6/Chny/2024 the assessee establishes the business connection, then it is free to deal with its affairs in accordance with its requirements. In this case, there is no dispute with regard

Celestial Vision Ltd., Bvi vs. Assisstant Commissioner of Income Tax Int Tax Circle 2(1)(1), Mumbai

In the result, the appeal of the assessee is allowed for statistical purpose

ITA 2383/MUM/2024[2021-22]Status: DisposedITAT Mumbai11 Jul 2024AY 2021-22

Bench: Ms. Kavitha Rajagopal

For Respondent: Shri Anil Sant
Section 143(3)Section 250Section 44BSection 9(1)(vi)

case and in law the learned CIT(A) erred in accepting the findings of the Ld. AO that the Appellant had a business connection in India and simultaneously treating the Appellant as the Non-Resident Company. The action of the learned CIT(A) is self-contradictory. 6. On the facts ... income of Rs. 2,08,42,890/- for AY 2021-22. The case was selected for scrutiny and after holding that the assessee had business connection in India, the assessment was finalized at an income of Rs. 20,84,28,905/- as royalty income taxable @10% under

Qai India Ltd., New Delhi vs. DCIT, Circle- 21(2), New Delhi

In the result, the appeal of assessee is allowed for statistical purpose

ITA 1033/DEL/2018[2013-14]Status: DisposedITAT Delhi10 Jul 2024AY 2013-14

Bench: Dr. B.R.R. Kumar & Sh. Sudhir Kumarassessment Year: 2013-14 Qai India Ltd. Vs. Dcit 1010-12, Ansal Towers, 38, Circle -21(2) Nehru Place, New Delhi- New Delhi 110019 Pan No.Aaacq0883C (Appellant) (Respondent) Appellant By Sh. Ved Jain, Ar Supriya Mehta, Ar Respondent By Sh. Amaninder Singh, Sr. Dr Date Of Hearing: 04/06/2024 Date Of Pronouncement: 10/07/2024 Order Per Sudhir Kumar, Jm:

Section 143(2)Section 143(3)Section 195Section 40

have always applied to all persons, resident or nonresident, whether or not the nonresident person has a residence or place of business or business connection in India; or any other presence in any manner whatsoever in India. Mere requirement of permanent establishment in India was thus done away with. Nevertheless ... extended to all persons, resident or non- resident, whether or not the non-resident person has - [i] a residence or place of business or business connection in India; or [ii] any other presence in any manner whatsoever in India. It is indisputably true that such explanation inserted with retrospective effect

The ITO, Ward-1(2)(1), Vadodara vs. M/S. Meet Enterprises, Vadodara

In the result, appeal filed by the Revenue is dismissed

ITA 1772/AHD/2019[2013-14]Status: DisposedITAT Ahmedabad05 Jul 2024AY 2013-14

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 143(3)Section 68

with interest. 6.2 Once loan is taken by banking channel, retuned by banking channel along-with interest and also the fact that appellant had business connection in previous year then to my understanding, it is hard to believe that unsecured loan was bogus. If it had availed bogus loan then

Rane Engine Valve Ltd, Chennai vs. DCIT Corporate Circle-5(1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 885/CHNY/2020[2015-16]Status: DisposedITAT Chennai03 Jul 2024AY 2015-16

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

Further, it was noted by the CIT(A) that it does not matter as to whether the non-resident has permanent establishment or business connection or any presence in India insofar as TDS provisions are concerned especially in view of the amendment of Section 195, Explanation ... section 195 of the Act, introduced by Finance Act, 2012 w.e.f. 01.04.1962, whether or not the non-resident has a place of business or business connection or any other present in India, the assessee is liable for TDS failing with non-deduction of TDS, disallowance u/s.40

Rane Engine Valve Limited, Chennai vs. DCIT Corporate Circle 5(1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 2815/CHNY/2018[2014-15]Status: DisposedITAT Chennai03 Jul 2024AY 2014-15

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

Further, it was noted by the CIT(A) that it does not matter as to whether the non-resident has permanent establishment or business connection or any presence in India insofar as TDS provisions are concerned especially in view of the amendment of Section 195, Explanation ... section 195 of the Act, introduced by Finance Act, 2012 w.e.f. 01.04.1962, whether or not the non-resident has a place of business or business connection or any other present in India, the assessee is liable for TDS failing with non-deduction of TDS, disallowance u/s.40

Rane Engine Valve Limited, Chennai vs. DCIT Corporate Circle 5 (1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 1477/CHNY/2018[2013-14]Status: DisposedITAT Chennai03 Jul 2024AY 2013-14

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

Further, it was noted by the CIT(A) that it does not matter as to whether the non-resident has permanent establishment or business connection or any presence in India insofar as TDS provisions are concerned especially in view of the amendment of Section 195, Explanation ... section 195 of the Act, introduced by Finance Act, 2012 w.e.f. 01.04.1962, whether or not the non-resident has a place of business or business connection or any other present in India, the assessee is liable for TDS failing with non-deduction of TDS, disallowance u/s.40

Rane Engine Valves Limited, Chennai vs. DCIT, Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 1498/CHNY/2017[2012-13]Status: DisposedITAT Chennai03 Jul 2024AY 2012-13

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

Further, it was noted by the CIT(A) that it does not matter as to whether the non-resident has permanent establishment or business connection or any presence in India insofar as TDS provisions are concerned especially in view of the amendment of Section 195, Explanation ... section 195 of the Act, introduced by Finance Act, 2012 w.e.f. 01.04.1962, whether or not the non-resident has a place of business or business connection or any other present in India, the assessee is liable for TDS failing with non-deduction of TDS, disallowance u/s.40

Rane Engine Valves Limited, Chennai vs. DCIT, Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 1497/CHNY/2017[2011-12]Status: DisposedITAT Chennai03 Jul 2024AY 2011-12

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT
Section 143(3)

Further, it was noted by the CIT(A) that it does not matter as to whether the non-resident has permanent establishment or business connection or any presence in India insofar as TDS provisions are concerned especially in view of the amendment of Section 195, Explanation ... section 195 of the Act, introduced by Finance Act, 2012 w.e.f. 01.04.1962, whether or not the non-resident has a place of business or business connection or any other present in India, the assessee is liable for TDS failing with non-deduction of TDS, disallowance u/s.40

DCIT (It) 2(2)(2), Mumbai vs. The Hongkong and Shanghai Banking Corp Ltd, Mumbai

In the result, the captioned appeals by the assessee are partly

ITA 7309/MUM/2016[2008-09]Status: DisposedITAT Mumbai28 Jun 2024AY 2008-09

Bench: Shri Narendra Kumar Billaiya, Hon'Ble

also held that under s. 9 of the IT Act all incomes accruing or arising directly or indirectly through or from any business connection in India or through or from any source of income in India can be taxed. As per s. I(1)(VI(o), income can be deemed

The Hongkong and Shanghai Banking Corporation Ltd, Mumbai vs. Addl DIT (It) -3, Mumbai

In the result, the captioned appeals by the assessee are partly allowed and that of the revenue are partly allowed

ITA 7010/MUM/2016[2008-09]Status: DisposedITAT Mumbai28 Jun 2024AY 2008-09

Bench: Shri Narendra Kumar Billaiya, Hon'Ble & Shri Raj Kumar Chauhan, Hon'Ble

also held that under s. 9 of the IT Act all incomes accruing or arising directly or indirectly through or from any business connection in India or through or from any source of income in India can be taxed. As per s. 9(1)(v)(c), income can be deemed

DCIT (It) 2(2)(2), Mumbai vs. The Hongkong and Shanghai Banking Corp Ltd, Mumbai

In the result, the captioned appeals by the assessee are partly allowed and that of the revenue are partly allowed

ITA 4788/MUM/2016[2007-08]Status: DisposedITAT Mumbai28 Jun 2024AY 2007-08

Bench: Shri Narendra Kumar Billaiya, Hon'Ble & Shri Raj Kumar Chauhan, Hon'Ble

also held that under s. 9 of the IT Act all incomes accruing or arising directly or indirectly through or from any business connection in India or through or from any source of income in India can be taxed. As per s. 9(1)(v)(c), income can be deemed

DCIT (It) 2(2)(2), Mumbai vs. The Hongkong and Shanghai Banking Corp Ltd, Mumbai

In the result, the captioned appeals by the assessee are partly

ITA 4787/MUM/2016[2006-07]Status: DisposedITAT Mumbai28 Jun 2024AY 2006-07

Bench: Shri Narendra Kumar Billaiya, Hon'Ble

also held that under s. 9 of the IT Act all incomes accruing or arising directly or indirectly through or from any business connection in India or through or from any source of income in India can be taxed. As per s. I(1)(VI(o), income can be deemed

The Hong Kong & Shanghai Banking Corporation Ltd., Mumbai vs. Addl. Director of Income Tax (International Taxation) - Range -3, Mumbai

In the result, the captioned appeals by the assessee are partly

ITA 4767/MUM/2016[2007-08]Status: DisposedITAT Mumbai28 Jun 2024AY 2007-08

Bench: Shri Narendra Kumar Billaiya, Hon'Ble

also held that under s. 9 of the IT Act all incomes accruing or arising directly or indirectly through or from any business connection in India or through or from any source of income in India can be taxed. As per s. I(1)(VI(o), income can be deemed

The Hong Kong & Shanghai Banking Corporation Ltd., Mumbai vs. Addl. Director of Income Tax (International Taxation) - Range -3, Mumbai

In the result, the captioned appeals by the assessee are partly

ITA 4766/MUM/2016[2006-07]Status: DisposedITAT Mumbai28 Jun 2024AY 2006-07

Bench: Shri Narendra Kumar Billaiya, Hon'Ble

also held that under s. 9 of the IT Act all incomes accruing or arising directly or indirectly through or from any business connection in India or through or from any source of income in India can be taxed. As per s. I(1)(VI(o), income can be deemed