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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

M/S. Bajaj Auto Ltd., Mumbai vs. The Dy CIT Cir 3(1), Mumbai

In the result, the appeals filed by the assesse are partly allowed and the appeals filed by the revenue are dismissed

ITA 3055/MUM/2005[2000-2001]Status: DisposedITAT Mumbai28 Nov 2023AY 2000-2001

Bench: Aby T Varkey & Shri Amarjit Singh

For Appellant: Ms. Vasanti Patel & Shri CharuFor Respondent: Shri. Krishna Bandi
Section 143(2)Section 143(3)

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

The DCIT 3(1), Mumbai vs. M/S. Bajajaj Auto Ltd., Mumbai

In the result, the appeals filed by the assesse are partly allowed and the appeals filed by the revenue are dismissed

ITA 2655/MUM/2005[2000-2001]Status: DisposedITAT Mumbai28 Nov 2023AY 2000-2001

Bench: Aby T Varkey & Shri Amarjit Singh

For Appellant: Ms. Vasanti Patel & Shri CharuFor Respondent: Shri. Krishna Bandi
Section 143(2)Section 143(3)

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. The Dy CIT RG 3(1), Mumbai

In the result, the appeals filed by the assesse are partly allowed and the appeals filed by the revenue are dismissed

ITA 2125/MUM/2005[1999-2000]Status: DisposedITAT Mumbai28 Nov 2023AY 1999-2000

Bench: Aby T Varkey & Shri Amarjit Singh

For Appellant: Ms. Vasanti Patel & Shri CharuFor Respondent: Shri. Krishna Bandi
Section 143(2)Section 143(3)

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

The Dy CIT RG 3(1), Mumbai vs. M/S. Bajaj Auto Ltd, Mumbai

In the result, the appeals filed by the assesse are partly allowed and the appeals filed by the revenue are dismissed

ITA 1933/MUM/2005[1999-2000]Status: DisposedITAT Mumbai28 Nov 2023AY 1999-2000

Bench: Aby T Varkey & Shri Amarjit Singh

For Appellant: Ms. Vasanti Patel & Shri CharuFor Respondent: Shri. Krishna Bandi
Section 143(2)Section 143(3)

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

Deputy Commissioner of Income Tax (Central), Jabalpur vs. M/S. Jabalpur Hospital & Research Center, Jabalpur

In the result, the appeal filed by the revenue is dismissed and the Cross objections filed by the assessee are partly allowed

ITA 19/JAB/2019[2016-17]Status: DisposedITAT Jabalpur20 Nov 2023AY 2016-17

Bench: Shri Om Prakash Kant & Shri Pavan Kumar Gadaledcit, Vs. Jabalpur Hospital & Central Circle, Researchcentre,Pvtltd Ramnath Russel Crossing, Building,Napier Town, Napier Town, Jabalpur-482001, Jabalpur-482001 Madhya Pradesh. Madhya Pradesh Pan/Gir No. : Aabcj1959K Appellant .. Respondent Co.No.04/Jab/2019 (A.Y. 2016-17) (In Ita No.19/Jab/2019) Jabalpur Hospital & Vs. Dcit, Research Centre Pvt Ltd, Central Circle, Russel Crossing, Ramnath Napier Town, Building,Napier Town, Jabalpur-482001. Jabalpur-482001. Madhya Pradesh. Madhya Pradesh. Pan/Gir No. : Aabcj1959K Appellant .. Respondent

For Appellant: Shri Dhiraj Ghai.CA.ARFor Respondent: Shri Saad Kidwai. CIT-DR
Section 142(1)

interest of Rs. 24,20,375/-, hence it is requested that this disallowance may kindly be deleted." 15. The CIT(A) having considered the business connection with the associate concerns and commercial operations has deleted the addition, observing at Para 6.3.3 of the order as under: 6.3.3. Decision have carefully ... getting practical training in the hospital run by the assessee as per the agreement. Hence the interest free loans are provided considering the business connection of the parties. The CIT(A) has considered the facts, submissions and relied on the judicial decisions and has passed a conclusive and reasoned order

Mosdorfer Gmbh, Mumbai vs. ACIT Circle Int. Tax. 2(2)(1), New Delhi

ITA 286/DEL/2023[2013-14]Status: DisposedITAT Delhi20 Nov 2023AY 2013-14

Bench: Sh. G.S.Pannu, Hon’Ble & Sh. Anubhav Sharmamosdorfer Gmbh Vs. Acit, 408, Maker Bhavan No. International Tax 3, 21, New Marine Circle 2(2)(1) Lines, Mumbai Pan : Aagcm6984N (Appellant) (Respondent)

Section 147Section 148

construction or other business sites in India. Also, Mosdorfer GMBH has no employee working in India. Therefore, Mosdorfer GMBH does not have any business connection or a permanent establishment in India. With respect to document required as per point number 1 to 4, we would like to humbly submit that ... outside India, the supplies were out of India and amounts were also received out of India. It was submitted that infact there was no business connection to bring Section 9 of the Act in operation. 10. On the other hand, Ld. DR has submitted that agreement were not filed

Permali Wallace Pvt. Ltd, Bhopal vs. ITO (It & Tp), Bhopal

ITA 552/IND/2018[2016-17]Status: DisposedITAT Indore09 Nov 2023AY 2016-17

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 195Section 195rSection 201(1)Section 271CSection 9(1)(i)Section 9(1)(vii)

purchase of timber made through Mr. Deshal Merchant, an Indian agent of M/s HSK. Therefore, according to AO, M/s HSK was having a Business-Connection[“BC”] in India in terms of section 9(1)(i) of the Income- tax Act, 1961 as well as a Permanent-Establishment[“PE”] in terms ... included in the total income of the non- resident, whether or not, - (i) the non-resident has a residence or place of business or business connection in India; or the non-resident has rendered services in India. (ii) 9. The AO has dealt the payments made to M/s Tethys

Permali Wallace Pvt. Ltd, Bhopal vs. ITO (It & Tp), Bhopal

ITA 551/IND/2018[15-16]Status: DisposedITAT Indore09 Nov 2023

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 195Section 195rSection 201(1)Section 271CSection 9(1)(i)Section 9(1)(vii)

purchase of timber made through Mr. Deshal Merchant, an Indian agent of M/s HSK. Therefore, according to AO, M/s HSK was having a Business-Connection[“BC”] in India in terms of section 9(1)(i) of the Income- tax Act, 1961 as well as a Permanent-Establishment[“PE”] in terms ... included in the total income of the non- resident, whether or not, - (i) the non-resident has a residence or place of business or business connection in India; or the non-resident has rendered services in India. (ii) 9. The AO has dealt the payments made to M/s Tethys

Permali Wallace Pvt. Ltd, Bhopal vs. ITO (It & Tp), Bhopal

ITA 550/IND/2018[14-15]Status: DisposedITAT Indore09 Nov 2023

Bench: Shri Vijay Pal Rao & Shri B.M. Biyani

Section 195Section 195rSection 201(1)Section 271CSection 9(1)(i)Section 9(1)(vii)

purchase of timber made through Mr. Deshal Merchant, an Indian agent of M/s HSK. Therefore, according to AO, M/s HSK was having a Business-Connection[“BC”] in India in terms of section 9(1)(i) of the Income- tax Act, 1961 as well as a Permanent-Establishment[“PE”] in terms ... included in the total income of the non- resident, whether or not, - (i) the non-resident has a residence or place of business or business connection in India; or the non-resident has rendered services in India. (ii) 9. The AO has dealt the payments made to M/s Tethys

Mrs. Renu Tikamdas Tharani, Mumbai vs. DCIT (It)-4(2)(1), Mumbai

ITA 2334/MUM/2018[2007-08]Status: DisposedITAT Mumbai30 Oct 2023AY 2007-08
For Appellant: Shri Mukesh AdvaniFor Respondent: Shri Anil Sant
Section 143(3)Section 147Section 148

said account. b) As per Sec. 9 of the IT Act, 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

Taj Tv Ltd., Mumbai vs. Dy CIT (It) 4(1)(2), Mumbai

In the result, the appeal by the assessee is allowed, while the appeal by the Revenue is dismissed

ITA 894/MUM/2020[2013-14]Status: DisposedITAT Mumbai26 Oct 2023AY 2013-14

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Shri Madhur AgarwalFor Respondent: Shri Anil Sant
Section 250

uplinking charges of USD 1,026,671. The aforesaid payments were made by the assessee to non-residents who do not have any business connection in India. During the assessment proceedings, the assessee submitted that the payments made by the assessee outside India to Taj TV Limited ITA no.894/Mum./2020 ... providing transponder facilities to various entities in the world. Further, Intelsat was not carrying any business activities in India and does not have any business connection in India as per section 9(1)(i) of the Act. Accordingly, the assessee submitted that these payments are not taxable in India

DCIT (It) 4(1)(2), Mumbai vs. Taj Tv Ltd., Mumbai

In the result, the appeal by the assessee is allowed, while the appeal by the Revenue is dismissed

ITA 1351/MUM/2020[2013-14]Status: DisposedITAT Mumbai26 Oct 2023AY 2013-14

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Shri Madhur AgarwalFor Respondent: Shri Anil Sant
Section 250

uplinking charges of USD 1,026,671. The aforesaid payments were made by the assessee to non-residents who do not have any business connection in India. During the assessment proceedings, the assessee submitted that the payments made by the assessee outside India to Taj TV Limited ITA no.894/Mum./2020 ... providing transponder facilities to various entities in the world. Further, Intelsat was not carrying any business activities in India and does not have any business connection in India as per section 9(1)(i) of the Act. Accordingly, the assessee submitted that these payments are not taxable in India

Hindustan Epc Company Ltd., New Delhi vs. ACIT, Circle- 11(2), New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 7112/DEL/2019[2016-17]Status: DisposedITAT Delhi20 Oct 2023AY 2016-17

Bench: Shri C. N. Prasad & Shri M. Balaganeshhindustan Epc Company Ltd, Vs. Acit, 239, Okhla Industrial Estate, Circle-11(2), Phase-Iii, New Delhi New Delhi (Appellant) (Respondent) Pan: Aafcm9606E Acit, Vs. Hindustan Epc Company Ltd, Circle-11(2), 239, Okhla Industrial Estate, New Delhi Phase-Iii, New Delhi (Appellant) (Respondent) Pan: Aafcm9606E

For Appellant: Sh. Satyen Sethi, AdvFor Respondent: Shri Vijay Vasanta, CIT DR
Section 143(3)Section 14A

commission is paid for import of goods and the goods imported were used in India. Therefore, the foreign agent would be deemed to have business connection in India and hence the payment made to them would be chargeable to tax in India. With these observations, the ld. CIT(A) upheld ... argued ITA No. 7112/Del/2019 (A) & 6985/Del/2019 (R) Hindustan EPC Company Ltd that the source of income is in India ; payer is in India and business connection is in India. 6.5. We find that the ld. CIT(A) had given a categorical finding on the following facts :- a) Commission is paid

ACIT, Circle- 11(2), New Delhi vs. Hindustan Epc Company Ltd., New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 6985/DEL/2019[2016-17]Status: DisposedITAT Delhi20 Oct 2023AY 2016-17

Bench: Shri C. N. Prasad & Shri M. Balaganeshhindustan Epc Company Ltd, Vs. Acit, 239, Okhla Industrial Estate, Circle-11(2), Phase-Iii, New Delhi New Delhi (Appellant) (Respondent) Pan: Aafcm9606E Acit, Vs. Hindustan Epc Company Ltd, Circle-11(2), 239, Okhla Industrial Estate, New Delhi Phase-Iii, New Delhi (Appellant) (Respondent) Pan: Aafcm9606E

For Appellant: Sh. Satyen Sethi, AdvFor Respondent: Shri Vijay Vasanta, CIT DR
Section 143(3)Section 14A

commission is paid for import of goods and the goods imported were used in India. Therefore, the foreign agent would be deemed to have business connection in India and hence the payment made to them would be chargeable to tax in India. With these observations, the ld. CIT(A) upheld ... argued ITA No. 7112/Del/2019 (A) & 6985/Del/2019 (R) Hindustan EPC Company Ltd that the source of income is in India ; payer is in India and business connection is in India. 6.5. We find that the ld. CIT(A) had given a categorical finding on the following facts :- a) Commission is paid

Amadeus It Group Sa, Spain vs. ACIT, Circle-1(1)(1) Int.Taxation, New Delhi

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

ITA 1742/DEL/2023[2020-21]Status: DisposedITAT Delhi16 Oct 2023AY 2020-21

Bench: Shri G.S. Pannu, Hon’Ble & Ms. Astha Chandraasstt. Year: 2020-21

For Appellant: Sh. Neeraj Jain &For Respondent: Shri Vizay B. Vasanta, CIT-DR
Section 143(3)

incomes shall be deemed to accrue or arise in India: (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

M M Creations, New Delhi vs. ACIT, Circle- 32(1), New Delhi

In the result, the appeal of assessee is partly allowed for statistical purposes on grounds no

ITA 436/DEL/2018[2012-13]Status: DisposedITAT Delhi13 Oct 2023AY 2012-13

Bench: SHRI CHANDRA MOHAN GARG (Judicial Member), DR. B.R.R. KUMAR (Accountant Member)

For Appellant: Shri Kapil Goel, AdvFor Respondent: Ms. Smita Singh, Sr. DR
Section 194CSection 194C(6)Section 24Section 251Section 68

being an exporter and having handsome exports of more than Rs. 6 crore refer audited defect free final accounts addition is not justified existing business connection and business activities in foreign countries not doubted. The ld. counsel submitted that the assessee has documentary evidence such as ledger account of travel

Sunbeam Lightweighting Solutions Pvt Ltd (Formely Sunbeam Auto Pvt Ltd), Gurgaon vs. DCIT Circle-24(2), New Delhi

ITA 117/DEL/2020[2015-16]Status: DisposedITAT Delhi11 Oct 2023AY 2015-16

Bench: Sh. M. Balaganesh & Sh.Anubhav Sharma

Section 143(3)Section 195Section 234Section 234ASection 40Section 9Section 9(1)(vii)Section 9(2)

Permanent Establishment (“PE”) in USA. Both the parties to whom the assessee paid commission are tax residents of USA and had no business connection in India nor they have any PE in India. None of the agents is related to any of the Director of the company directly or indirectly ... concluded that since the sales agents rendered services outside India and that they had no ‘business connection’ or PE and that they are tax residents of USA, the payments made and remitted directly to them in foreign exchange are not taxable under the provisions of India-USA DTAA. Therefore, there

Sunbeam Lightweighting Solutions Pvt Ltd (Formely Sunbeam Auto Pvt Ltd), Gurgaon vs. DCIT Circle-24(2), New Delhi

ITA 116/DEL/2020[2014-15]Status: DisposedITAT Delhi11 Oct 2023AY 2014-15

Bench: Sh. M. Balaganesh & Sh.Anubhav Sharma

Section 143(3)Section 195Section 234Section 234ASection 40Section 9Section 9(1)(vii)Section 9(2)

Permanent Establishment (“PE”) in USA. Both the parties to whom the assessee paid commission are tax residents of USA and had no business connection in India nor they have any PE in India. None of the agents is related to any of the Director of the company directly or indirectly ... concluded that since the sales agents rendered services outside India and that they had no ‘business connection’ or PE and that they are tax residents of USA, the payments made and remitted directly to them in foreign exchange are not taxable under the provisions of India-USA DTAA. Therefore, there

Gillette India Limited, Spa-65A, Industrial Area, Bhiwadi, District- Alwar vs. PCIT, Jaipur-1, Jaipur

In the result, the appeal of the assessee is partly allowed

ITA 313/JPR/2023[2016-17]Status: DisposedITAT Jaipur27 Sept 2023AY 2016-17

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. P. C. ParwalFor Respondent: Sh. Ajay Malik (CIT) a
Section 143(3)Section 192Section 194Section 195Section 263Section 36(1)(va)Section 40

3CEB include certain amounts which are not liable for taxation u/s 195 of the Act being in the nature of business income (not having Business connection or Permanent Establishment in India) or reimbursement of expenses. (c) not considering the detailed reconciliation submitted along with documentary evidence in response to notice ... 3CEB include certain amounts which are not liable for taxation u/s 195 of the Act being in the nature of business income (not having Business connection or Permanent Establishment in India) or reimbursement of expenses. (g) not considering the detailed reconciliation submitted along with documentary evidence in response to notice

The ACIT - 14(2)(2), Mumbai vs. M/S Pfizer Ltd., Mumbai

In the result appeal of the ld AO for assessment year

ITA 1777/MUM/2020[2016-17]Status: DisposedITAT Mumbai22 Sept 2023AY 2016-17

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm

For Appellant: Shri Jeet Kamdar, AdvocateFor Respondent: Shri K. C. Selvamani CIT DR
Section 143Section 32

amount of payment and business of the assessee. In the present case there is no document available, therefore, it is impossible to establish any business connection between the business of the assessee and the nature of payment made. Even the assessee could not establish that why the payment was made