“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

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

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

Uk Grid Solutions Limited, United Kingdom vs. DCIT Circle Intl. Taxation 3(1)(1), New Delhi

In the result, the appeal of the assessee in ITA No

ITA 2240/DEL/2023[2020-21]Status: DisposedITAT Delhi13 Mar 2024AY 2020-21

Bench: Shri C. N. Prasad & Shri M. Balaganesh

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Vizay B. Vasanta, CIT DR

Section 143(3)Section 144C(13)

PGCIL contract amounting to INR 468,42,64,711/-, it was held that these also constitute business receipts and are attributable to the business connection of the assessee in India. The profit rate on such receipts was assumed at 10%, being the standard benchmarking followed by the Act in various ... under the provisions of the Act. 5. That the DRP/assessing officer erred on facts and in law in arbitrarily holding that the Appellant had business connection in India during the subject assessment year. 6. That the DRP/ assessing officer erred on facts and in law in arbitrarily holding that

Uk Grid Solutions Limited, United Kingdom vs. DCIT Circle Intl. Taxation 3(1)(1), New Delhi

In the result, the appeal of the assessee in ITA No

ITA 2239/DEL/2023[2015-16]Status: DisposedITAT Delhi13 Mar 2024AY 2015-16

Bench: Shri C. N. Prasad & Shri M. Balaganesh

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Vizay B. Vasanta, CIT DR

Section 143(3)Section 144C(13)

Ge Hydro France, New Delhi vs. DCIT, Circle-1(3)(1), International Taxation, New Delhi

In the result, the appeal of the assessee in ITA No

ITA 2086/DEL/2022[2019-20]Status: DisposedITAT Delhi13 Mar 2024AY 2019-20

Bench: Shri C. N. Prasad & Shri M. Balaganesh

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Aditya Vohra, Adv

Section 143(3)Section 144C(13)Section 40Section 44B

provisions of the Act. 4. That the DRP/ assessing officer erred on facts and in law in arbitrarily holding that the Appellant had business connection in India during the subject assessment year. 5. That the DRP/ assessing officer erred on facts and in law in arbitrarily holding that there exists ... That the DRP/ assessing officer erred on facts and in law in attributing 100% profits from offshore supplies made to THDC to the alleged business connection/ PE, without appreciating that no part of the activity relating to said offshore supplies was undertaken by the alleged PE in India. 8. Without

Ge Hydro France, New Delhi vs. DCIT, Circle-1(3)(1), International Taxation, New Delhi

In the result, the appeal of the assessee in ITA No

ITA 2085/DEL/2022[2018-19]Status: DisposedITAT Delhi13 Mar 2024AY 2018-19

Bench: Shri C. N. Prasad & Shri M. Balaganesh

For Appellant: Shri Ajay Vohra, Sr. AdvFor Respondent: Shri Aditya Vohra, Adv

Section 143(3)Section 144C(13)Section 40Section 44B

International Education & Research Foundation, Ahmedabad vs. The DCIT, Int-Taxa-1, Ahmedabad

In the result, the issue is restored to the file of Assessing Officer with the aforesaid and directions

ITA 183/AHD/2020[2018-19]Status: DisposedITAT Ahmedabad08 Mar 2024AY 2018-19

Bench: Smt. Annapurna Gupta& Shri Siddhartha Nautiyal

For Appellant: Respondent by: Shri Ramesh Kumar, Sr. D.RFor Respondent: Shri Ramesh Kumar, Sr. D.R

Section 195Section 201Section 9(1)(vi)

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER& SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER

International Education & Research Foundation, Ahmedabad vs. The DCIT, Int-Taxa-1, Ahmedabad

In the result, the issue is restored to the file of Assessing Officer with the aforesaid and directions

ITA 182/AHD/2020[2017-18]Status: DisposedITAT Ahmedabad08 Mar 2024AY 2017-18

Bench: Smt. Annapurna Gupta& Shri Siddhartha Nautiyal

For Appellant: Respondent by: Shri Ramesh Kumar, Sr. D.RFor Respondent: Shri Ramesh Kumar, Sr. D.R

Section 195Section 201Section 9(1)(vi)

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER& SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER

DCIT 22(1), Mumbai vs. Creations by Shanagar, Mumbai

In the result, appeal of Revenue for Assessment Year 2010-11

ITA 2476/MUM/2023[2016-17]Status: DisposedITAT Mumbai29 Feb 2024AY 2016-17

Bench: Shri Aby T. Varkey, Jm & Shri S Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.2476/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2016-17) Dcit-22(1) बिधम/ Creations By Shanagar Room No. 322, 3Rd Floor, 34, Auro Villa, St. Vs. Piramal Chamber, Lalbaug, Andrews Rd Santaxruz Mumbai-400012. (West), Mumbai-400054. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aacfc7957L (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Milin Bakhai Revenue By: Shri H. M. Bhatt (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 27/02/2024 घोषणा की तारीख /Date Of Pronouncement: 29/02/2024 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Revenue Against The Order Of The Ld. Commissioner Of Income Tax/Nfac, [Hereinafter Referred To As The “Cit”], Delhi Dated 16.05.2023 For Assessment Year 2016-17. 2. The Sole Issue Raised By The Revenue Is Against The Action Of The Ld. Cit(A) Deleting The Addition In Respect Of Commission Paid To Foreign Agent Amounting To Rs.1,61,90,101/-.

For Appellant: Shri Milin BakhaiFor Respondent: Shri H. M. Bhatt (Sr. DR)

Section 143(3)Section 195Section 9(2)

deemed to accrue in India and shall be included in total income whether or not the non-resident has a resident or place of business connection in India or non-resident has rendered services in India. The AO by referring to Circular No. 7 of 2009 dated 20.10.2009 disallowed

Natasha Kohli, New Delhi vs. ACIT Central Circle-8, New Delhi

In the result, appeal of the assessee stands partly allowed for statistical purposes

ITA 1792/DEL/2020[2014-15]Status: DisposedITAT Delhi29 Feb 2024AY 2014-15

Bench: Shri Narendra Kumar Billaiya & Shri Kul Bharatr Assessment Year: 2014-15

Section 143(2)Section 143(3)Section 17(2)(iv)Section 69

Further, the learned counsel for the assessee also clarified that Sh. Ladli Pershad Jaiswal was not having any major stake or financial interest or business connection in India during the AY 2006-07 and 2007-08. Therefore, we find it difficult to subscribe to the reasoning given by the Assessing

ITO, Corporate Ward - 1 (2), Chennai vs. M/S. Bsm Infra Pvt. Ltd., Chennai

Appeal stand allowed for statistical purposes

ITA 95/CHNY/2020[2013-14]Status: DisposedITAT Chennai28 Feb 2024AY 2013-14

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Manomohan Das

For Appellant: Shri I.Dinesh, (Advocate)- Ld.ARFor Respondent: Shri P.Sajit Kumar,(JCIT) –Ld. Sr. DR

Section 143(3)

also submitted that the assessee had initiated legal proceedings against the director. However, Ld. AO held that the assessee had business connection with RCM since it had taken short term loan from RCM. Therefore, the amount reflected in Form 26AS was added to the income of the assessee. 3.2 During

M/S. Isagro (Asia) Agrochemicals Pvt. Ltd. Successor M/S. P I Industries Ltd., Mumbai vs. DCIT, Circle 6(1), Mumbai

In the result, the appeal of the assessee for A

ITA 3585/MUM/2023[2010-11]Status: DisposedITAT Mumbai27 Feb 2024AY 2010-11

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI PRASHANT MAHARISHI (Accountant Member)

Section 143(3)

Worldwide is on account of development in chemical magazine of foreign country and this entity is non-resident. This entity does not have any business connection in India or PE and since it is a business income, therefore same could not have been subjected to TDS. There were certain other ... expenditure incurred in chemical magazine of foreign country paid to a foreign entity which it has been stated that it does not have any business connection in India, then ostensibly same cannot be subjected to TDS and therefore same should have removed from the disallowance. Regarding these details of expenses

M/S. Isagro (Asia) Agrochemicals Pvt. Ltd. Successor M/S. P I Industries Ltd., Mumbai vs. DCIT Circle 6(1)(2), Mumbai

In the result, the appeal of the assessee for A

ITA 3584/MUM/2023[2011-12]Status: DisposedITAT Mumbai27 Feb 2024AY 2011-12

Section 143(3)

M/S. Isagro (Asia) Agrochemicals Pvt. Ltd. Successor M/. P I Industries Ltd., Mumbai vs. DCIT Circle 6(1)(2), Mumbai

In the result, the appeal of the assessee for A

ITA 3583/MUM/2023[2017-18]Status: DisposedITAT Mumbai27 Feb 2024AY 2017-18

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI PRASHANT MAHARISHI (Accountant Member)

Section 143(3)

Bajaj Housing Finance Limited, Pune vs. The Principal Commissioner of Income Tax-3, Pune

In the result, appeal of the assessee is allowed

ITA 564/PUN/2023[2018-19]Status: DisposedITAT Pune26 Feb 2024AY 2018-19

Bench: Shri S.S.Godara & Dr. Dipak P. Ripoteआयकर अपील सं. / Ita No.564/Pun/2023 िनधा"रण वष" / Assessment Year : 2018-19 Bajaj Housing Finance Limited, The Principal 3Rd Floor, Panchsil Tech Park, V Commissioner Of Income Viman Nagar, Pune – 411014. S Tax-3, Pune. Pan: Aadcb6018P Appellant/ Assessee Respondent /Revenue Assessee By Shri Percy Pardiwala & Ms.Vasanti B.Patel – Ar’S Revenue By Shri Keyur Patel – Cit(Dr) Date Of Hearing 12/01/2024 Date Of Pronouncement 26/02/2024 आदेश/ Order Per Dr. Dipak P. Ripote, Am: This Is An Appeal Filed By The Assessee Against The Order Under Section 263 Of The Income Tax Act, 1961, Passed By Ld.Principal Commissioner Of Income Tax, Pune-3 On 14.03.2023. In This Case, Assessment Order Was Passed On 26.02.2021. The Assessee Has Raised The Following Grounds Of Appeal : 1. Ground I: Challenging The Validity Of Revision Proceedings Under Section 263 Of The Act 1.1. The Learned Pcit Failed To Appreciate That The Assessment Order Passed By The Assistant Commissioner Of Income Tax, Circle 8, Pune (Hereinafter Referred To As Learned Ao) Under Section 143(3) Of The Act Bajaj Housing Finance Limited [A]

Section 143(1)Section 143(3)Section 2Section 263Section 36Section 36(1)(viia)

Officer has recorded that from the details submitted by the assessee and the explanation given by him, it was observed that assessee had regular business connection with the company in which investment had been made and also there was business income to the assessee from the same. Therefore, interest expense ... agrees that the Assessing Officer has recorded from the details submitted by respondent and the explanation given by respondent that the assessee had regular business connection with the company in which investment has been made and also there was a business income to the assessee from the same. He notes

DCIT RG. - 3(1), Mumbai vs. M/S. Bajaj Auto Ltd., Mumbai

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

ITA 4372/MUM/2005[2001-2002]Status: DisposedITAT Mumbai23 Feb 2024AY 2001-2002

Bench: Shri Aby T Varkey, Hon’Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Bajaj Auto Limited V. Dcit – Range – 3(1) Bajaj Bhavan, 226-Nariman Point 6Th Floor, Aayakar Bhavan Mumbai – 400021 M.K. Road, Mumbai - 400020 Pan : Aaacb3370K (Appellant) (Respondent) Dcit – Range – 3(1) V. M/S. Bajaj Auto Limited Room No. 623, 6Th Floor Bajaj Bhavan, 226-Nariman Point Mumbai – 400021 Aayakar Bhavan M.K. Road, Mumbai - 400020 Pan : Aaacb3370K (Appellant) (Respondent) Assessee Represented By : Ms. Vasanti Patel& Shri Kirit Kamdar Department Represented By : Shri Ankush Kapoor

Section 143(4)(b)Section 234Section 35Section 35DSection 37(1)Section 40

allowed the claim of the aforesaid expenses after verification that payment for the purchases were made from the non-residents having no business connection in India and same was not in nature of income that arise or accrued in India. 111. Heard both the sides and perused the material ... holding that the assessee has made payment for the various expenses as referred above to the non-residents who were having no business connection in India, therefore, no tax was deducted for such payments. During the course of appellate proceedings before us revenue has not brought any material contrary

M/S. Bajaj Auto Ltd., Mumbai vs. DCIT RG. - 3(1), Mumbai

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

ITA 4236/MUM/2005[2001-2002]Status: DisposedITAT Mumbai23 Feb 2024AY 2001-2002

Section 143(4)(b)Section 234Section 35Section 35DSection 37(1)Section 40

Ge Energy Parts Inc, Wildwood Parkway Atlanta Ga Us vs. Assistant Commissioner of Income-Tax Circle-1(3)(1), International Taxation, Delhi

In the result, the appeal of the assessee stands allowed

ITA 3199/DEL/2023[2021-22]Status: DisposedITAT Delhi15 Feb 2024AY 2021-22

Bench: Shri Shamim Yahya & Shri Anubhav Sharma[Assessment Year: 2021-22]

Section 143(3)Section 144CSection 153Section 44BSection 9(1)(i)Section 90

Treaty"). 4. On the facts and circumstances of the case & in law, Ld. AO/ DRP erred in holding that the Appellant has a business connection in India under section 9(1)(i) of the Act without appreciating that the Appellant is governed by the beneficial provisions of DTAA in view ... principles of jurisprudence. 6. On the facts and circumstances of the case & in law, the Ld. AO/ DRP holding that the Appellant has a business connection as well as PE in India by mechanically placing reliance on the AY 2020-21 without bringing on record any corroborative evidence to substantiate

Narendra Mahendra Kothari, Chennai vs. ITO Non Corporate Ward 5(2), Chennai

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

ITA 1006/CHNY/2019[2014-15]Status: DisposedITAT Chennai14 Feb 2024AY 2014-15

Bench: Shri V. Durga Rao, Hon’Ble & Shri Manjunatha. G, Hon’Bleआयकर अपील सं./Ita No.1006/Chny/2019 िनधा"रण वष"/Assessment Year: 2014-15 V. Shri Narendra Mahendra- The Income Tax Officer, Kothari, Non-Corporate Ward-5(2), No.76, Osian Heights, Chennai. Basin Bridge Road, Mint, Chennai-600 079. [Pan: Amopk 2535 Q] (अपीलाथ"/Appellant) (""यथ"/Respondent) : अपीलाथ" क" ओर से/ Appellant By Shri D. Anand, Advocate : ""यथ" क" ओर से /Respondent By Shri Arv Sreenivasan, Addl.Cit : सुनवाईक"तारीख/Date Of Hearing 05.02.2024 घोषणाक"तारीख /Date Of : 14.02.2024 Pronouncement

Section 143(3)Section 40A(3)Section 54Section 68Section 80C

assessee are different from one dealt by IRIS. Therefore, from the above, it is undisputedly clear that the assessee could not establish any business connection with IRIS to prove cash advance received from the party. Therefore, in our considered view, there is no error in the reasons given

Sanjay Kumar, Ireland vs. ACIT, Int.Taxation, Gurgaon

In the result, the appeals of the assessee are allowed

ITA 1479/DEL/2023[2019-20]Status: DisposedITAT Delhi14 Feb 2024AY 2019-20

Bench: Shri Challa Nagendra Prasad & Dr. B. R. R. Kumar

For Appellant: Ms. Tanya, AdvFor Respondent: Sh. Vizay B. Vasanta, CIT-DR

Section 139Section 143(3)Section 15Section 270ASection 5Section 5(2)Section 6Section 9Section 9(1)(ii)

shall be deemed to accrue or arise in India :— 27(i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through ... asset situate in India. Explanation 1.—For the purposes of this clause— (a) in the case of a business, other than the business having business connection in India on account of significant economic presence, of which all the operations are not carried out in India, the income of the business

Vishal Gulati, Haryana vs. ACIT, Circle International Taxation1(3)(1), New Delhi

In the result, the appeals of the assessee are allowed

ITA 2171/DEL/2022[2018-19]Status: DisposedITAT Delhi14 Feb 2024AY 2018-19

Bench: Shri Challa Nagendra Prasad & Dr. B. R. R. Kumar

For Appellant: Ms. Shivani, AdvFor Respondent: Sh. Vizay B. Vasanta, CIT-DR

Section 10Section 139Section 143(3)Section 15Section 270ASection 5Section 5(2)Section 6Section 9Section 9(1)(ii)

Sabre Glbl Inc., New Delhi vs. ACIT (International Taxation), Circle- 3(1)(2), New Delhi

In the result, all the appeals of the assessee are allowed and that of the Revenue stands dismissed

ITA 6040/DEL/2019[2016-17]Status: HeardITAT Delhi09 Feb 2024AY 2016-17

Bench: Sh. G.S.Pannu, Hon’Ble & Sh. Anubhav Sharmaita No. 216/Del/2016, A.Y. 2012-13 Ita No. 559/Del/2017, A.Y. 2013-14 Ita No. 4838/Del/2017, A.Y. 2014-15 Ita No. 7724/Del/2018, A.Y. 2015-16 Ita No. 6040/Del/2019, A.Y. 2016-17 Sabre Glbl Inc. Vs. Asstt. Commissioner Of Income Mr. Tarandeep Singh, Tax, Adv. Circle-3(1)(2), C/O. Ms Associates, International Tax F-99, Lajpat Nagar-Ii, New Delhi New Delhi Pan : Aaact7216Q (Appellant) (Respondent) Deputy Commissioner Of Vs. Sabre Glbl Inc. Income Tax, Mr. Tarandeep Singh, Adv. International Taxation, C/O. Ms Associates, New Delhi F-99, Lajpat Nagar-Ii, New Delhi-110024 Pan : Aaact7216Q (Appellant) (Respondent) Assessee By Sh. Tarandeep Singh, Adv. Revenue By Sh. Vizay B. Vasanta, Cit-Dr

Section 143(2)Section 143(3)Section 144C(1)

Agent Permanent Establishment ("DAPE") under Article 5(4) of the DTAA. Further that AO erred in proposing to hold that the assessee has a business connection in India under Section 9(1) of the Act. 4.2 In this context the primary objection of the asseessee was that in proposing ... that the appellant has a : (a) Permanent Establishment in India in accordance with Article 5 of the India-USA Double Taxation Avoidance Agreement. (b) Business Connection in India in accordance with section 9 of the Income Tax Act. 2.1 That on facts and in law the AO/ DRP erred