“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

DCIT (It) -3(2) (2), Mumbai vs. M/S. Marriott International Design & Construction Services, Mumbai

In the result the appeal filed by the Assessing Officer is thus dismissed

ITA 2288/MUM/2021[2015-16]Status: DisposedITAT Mumbai22 Jun 2022AY 2015-16

Section 143Section 195Section 9

held that even if the assessee company was to be treated as an agent within the meaning of section 163(1), there was no business connection within the meaning of section 9(1) of the Act so the income accruing to the non resident foreign company could not be assessed ... between the business of the non resident and the activity in the taxable territories in respect of the income and, therefore, there was no business connection between the foreign company and the assessee company and the income could not be deemed to accrue or arise to the foreign company

DCIT (It) -3(2) (2), Mumbai vs. M/S. Marriott International Design & Construction Services, Mumbai

In the result the appeal filed by the Assessing Officer is thus dismissed

ITA 2286/MUM/2021[2013-14]Status: DisposedITAT Mumbai22 Jun 2022AY 2013-14

Section 143Section 195Section 9

Gea Process Engineering (India) P.Ltd, Gujrat vs. ITO, Mumbai

ITA 4338/MUM/2015[2008-09]Status: DisposedITAT Mumbai16 Jun 2022AY 2008-09

Bench: Shri Baskaran Br & Shri Kuldip Singhassessment Year: 2008-09 Dcit, M/S. Gea Process Circle- 2(2)(1), Engineering (India) Pvt. Room No.545, Ltd., Aayakar Bhavan, Vs. Savli Road, M.K. Road, P.O. Dumad, Mumbai - 400020 Baroda, Gujarat- 391740 Pan: Aaacl0566H (Appellant) (Respondent)

For Appellant: Shri Sunil M. Lala, A.RFor Respondent: Shri Rajesh Mishra, D.R

Section 2(24)Section 36Section 36(1)(va)Section 43B

excess of the value of the net assets of the business taken over, the excess id termed as 'goodwill'. Goodwill arises from business connections, trade name or reputation of an enterprise or from other intangible benefits enjoyed by an enterprise." 18. It is also relevant to note that Smifs Securities

DCIT Cir 2(2)(1), Mumbai vs. Gea Process Engineering ()I) P.Ltd, Gujrat

ITA 4155/MUM/2015[2008-09]Status: DisposedITAT Mumbai16 Jun 2022AY 2008-09

For Appellant: Shri Sunil M. Lala, A.RFor Respondent: Shri Rajesh Mishra, D.R

Section 2(24)Section 36Section 36(1)(va)Section 43B

M/S I & B Seeds Private Limited, Bangalore vs. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

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

ITA 3415/BANG/2018[2015-16]Status: DisposedITAT Bangalore15 Jun 2022AY 2015-16

Bench: Shri Chandra Poojari & Shri George George K.Assessment Year: 2015-16

For Appellant: Shri Nitish Ranjan, A.RFor Respondent: Shri Sankar Ganesh K, D.R

Section 43(1)

excess of the value of the net assets of the business taken over, the excess id termed as 'goodwill'. Goodwill arises from business connections, trade name or reputation of an enterprise or from other intangible benefits enjoyed by an enterprise." 11.2 Ld. A.R. stated that it has been consistently held

ITO, (It)-2(2)(2), Mumbai vs. M/S International Reinsurance and Insurance Consultancy & Broking Services Private Limited, Mumbai

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

ITA 2823/MUM/2019[2016-17]Status: DisposedITAT Mumbai13 Jun 2022AY 2016-17

Bench: Shri Amit Shukla, Jm & Shri Amarjit Singh, Am आयकरअपीलसं./ I.T.A. No. 2823/Mum/2019 (निर्धारणवर्ा / Assessment Year: 2016-17) M/S International Ito(It)-2(2)(2), Reinsurance & R. No. 1725, 17Th Floor, Air Insurance Consultancy India Building, Nariman & Broking Services Pvt. Point, बिधम/ Ltd. Mumbai-400 021 Vs. 15Th Floor, B-Wing, Nirmal Building, 241/242, Nariman Point, Mumbai-400 021 स्थायीलेखासं./जीआइआरसं./ Pan No. Aaaci2859J (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant By : Shri Milind Chavan, Ld. Dr प्रत्यथीकीओरसे/Respondent By : Shri Atul T. Suraiya, Ld. Ar सुनवाईकीतारीख/ : 12.05.2022 Date Of Hearing घोषणाकीतारीख / : 13.06.2022 Date Of Pronouncement आदेश / O R D E R Per Amit Shukla: The Aforesaid Appeal Has Been Filed By The Revenue Against The Impugned Order Dated 28.02.2019 Passed By Ld. Cit (Appeals)-56

For Appellant: Shri Milind Chavan, LdFor Respondent: Shri Atul T. Suraiya, Ld

Section 195Section 201Section 201(1)

NRRs only. It is also an admitted fact that, here in this case, none of the NRRs have PE in India nor any business connection and therefore, they were not liable to tax in 4 I.T.A. No. 2823/Mum/2019 M/s International Reinsurance and Insurance Consultancy & Broking Services Pvt. Ltd. India

DCIT (It) 2(1)(1), Mumbai vs. Credit Suisse (Singapore) Ltd., Mumbai

In the result, appeal by the Revenue for assessment year 2015–16

ITA 7262/MUM/2019[2015-16]Status: DisposedITAT Mumbai06 Jun 2022AY 2015-16

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Percy Pardiwala a/wFor Respondent: Shri Milind Chavan, Sr. DR

Section 250

controlled and regulated by SEBI and RBI in India, therefore, location control and management of the fund is situated in India, which constitutes a business connection in India and creates a sufficient nexus of the offshore distribution income with India. Accordingly the Assessing Officer taxed the commission income received ... India”. As per section 9(1)(i) of the Act, all the 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 in India, or through the transfer

DCIT(It)- 2(1)(1), Mumbai vs. Credit Suisse (Singapore) Ltd., Mumbai

In the result, appeal by the Revenue for assessment year 2015–16

ITA 6098/MUM/2019[2014-15]Status: DisposedITAT Mumbai06 Jun 2022AY 2014-15

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Percy Pardiwala a/wFor Respondent: Shri Milind Chavan, Sr. DR

Section 250

Immarsat Global Ltd., Mumbai vs. Dy CIT (International Taxation) Range-2(2)(1), Mumbai

In the result, the appeal is allowed

ITA 1031/MUM/2021[2017-18]Status: DisposedITAT Mumbai31 May 2022AY 2017-18

Section 143(3)Section 9(1)(vi)

treated as business profits), because of the presence of a PE in India, income arising from receipts from VSNL was attributable to a „business connection‟ in India. Therefore, he applied Rule 10 of the Income Tax Rules, 1962 and estimated the profit of the PE at 30% of the gross

M/S. Madura Coats Private Limited, Bangalore vs. Deputy Commissioner of Income Tax., (International Transaction), Circle- 1(2), Bangalore

In the result, appeals filed by assessee for A

ITA 1345/BANG/2019[2017-18]Status: DisposedITAT Bangalore31 May 2022AY 2017-18

Bench: Smt. Beena Pillai & Ms. Padmavathy Sit(It)A Nos. 1344 & 1345/Bang/2019 Assessment Years : 2016-17 & 2017-18 M/S. Madura Coats Pvt. The Deputy Ltd., Commissioner Of 7Th Floor, Jupiter Income Tax Prestige Technology (International Park, Vs. Taxation), Outer Ring Road, Circle – 1(2), Bangalore – 560 103. Bangalore. Pan: Aabcm8297K Appellant Respondent Assessee By : Shri Ajay Rotti, Ca : Shri Shehnawaz Ul Rahaman, Revenue By Addl. Cit (Dr) Date Of Hearing : 13-04-2022 Date Of Pronouncement : 31-05-2022 Order Per Beena Pillaipresent Appeals Are Filed By Assessee Against Order Dated 30.03.2019 Passed By Ld.Cit(A)-12, Bangalore For A.Ys. 2016-17 & 2017-18. It Is Submitted That The Issues Alleged By Assessee In Both These Years Are Identical & On Similar Facts. 2. Brief Facts Of The Case Are As Under: 2.1 Madura Coats Pvt Ltd (Mcpl) Is An Indian Company Carrying On The Business As Manufacturer & Merchant Of Sewing Threads & Other Goods, Possesses The Requisite Expertise & Experience By Virtue Of Having Several Qualified Personnel In Its Employment. During The Course Of Verification Conducted Us

For Appellant: Shri Ajay Rotti, CA

Section 195Section 201(1)

India. 18. The Ld.AR submitted that, business profits of a non-resident are taxable in India only if the non-resident has:  Business Connection in India under the Act or  Permanent Establishment ("PE") in India under the relevant DTAA (in the present case, under the Indo-UK DTAA ... submitted that J&P COats does not have a Business Connection in India under the Act or a Permanent Establishment ("PE") in India as per the provisions of Indo-UK DTAA. In the absence of a PE or a business connection in India, it was submitted that the receipts pertaining

M/S. Madura Coats Private Limited, Bangalore vs. Deputy Commissioner of Income Tax., (International Transaction), Circle- 1(2), Bangalore

In the result, appeals filed by assessee for A

ITA 1344/BANG/2019[2016-17]Status: DisposedITAT Bangalore31 May 2022AY 2016-17

For Appellant: Shri Ajay Rotti, CA

Section 195Section 201(1)

DDIT(It) 1(2) vs. Clough Projects International Pty. Ltd, New Delhi

In the result, all the appeals filed by revenue and CO’s filed by the assessee are treated as dismissed

ITA 2952/MUM/2010[2006-07]Status: DisposedITAT Mumbai30 May 2022AY 2006-07

Bench: Shri Amit Shukla, Jm & Shri Amarjit Singh, Am आयकरअपीलसं./ I.T.A. No. 2952/Mum/2010 & Cross Objection No. 09/Mum/2011 (निर्धारणवर्ा / Assessment Year: 2006-07) & आयकरअपीलसं./ I.T.A. No. 4930/Mum/2014 & Cross Objection No. 61/Mum/2016 (निर्धारणवर्ा / Assessment Year: 2007-08) & आयकरअपीलसं./ I.T.A. No. 4931/Mum/2014 & Cross Objection No. 62/Mum/2016 (निर्धारणवर्ा / Assessment Year: 2008-09)

For Appellant: Shri PurushottamFor Respondent: Shri Nishant Thakkar

Section 143(3)Section 44ASection 44B

supply of fabricated platform was essentially linked to installation of the platform in the Bombay High. Thus, according to the Department, there was a business connection and the supplies were linked to the Project in Bombay High. For this reason, according to the Department, the consideration received by the assessee

M/S Honeywell Technology Solutions Lab Private Limited, Bangalore vs. Joint Commissioner of Income Tax Special Range-3, Bangalore

ITA 2890/BANG/2018[2011-12]Status: DisposedITAT Bangalore30 May 2022AY 2011-12

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranm/S Honeywell Technolgoy Solutions Jt. Cit, Special Range 3 Pvt. Ltd. 2Nd Floor, Bmtc Building Survey No. 96 & 97, Boganahalli 6Th Block, Koramangala Village & Survey No. 72/2 & 72/5 Vs. Bengaluru 560095 Doddakananahalli Village Varthur Hobli, Bengaluru East Taluk, Bengaluru 560103 Pan – Aaach4151J Appellant Respondent Appellant By: Smt. Shreya Loyalaka, Advocate Respondent By: Shri Sumer Singh Meena, Cit-Dr Date Of Hearing: 30.03.2022 Date Of Pronouncement: 30.05.2022

For Appellant: Smt. Shreya Loyalaka, AdvocateFor Respondent: Shri Sumer Singh Meena, CIT-DR

Section 2Section 2(2)Section 80J

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 (ii) the non-resident has rendered services in India.” 20 M/s Honeywell Technolgoy Solutions ... deemed to accrue or arise in India, irrespective of the fact, whether the non-resident has a residence or place of business or business connection in India or it has rendered services in India. 19. Factually, the payments made to non-resident attorneys are neither in the nature of interest

M/S. Devanam Constructions Private Limited, Bangalore vs. The Assistant Commissioner of Income Tax, Circle- 2(1)(2), Bangalore

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

ITA 2644/BANG/2019[2014-15]Status: DisposedITAT Bangalore27 May 2022AY 2014-15

Bench: Shri Chandra Poojari, Am & Shri George George K, Jm

For Appellant: Sri.Nitish Ranjan, CAFor Respondent: Sri.Sankar Ganesh K, JCIT-DR

Section 143Section 143(2)Section 143(3)Section 2(22)(e)

however, rejected the contentions of the assessee. The CIT(A) held that the assessee could not establish that it has a regular business connection with 4 ITA No2644/Bang/2019. M/s.Davanam Constructions Private Limited. Kausthubha Project Private Limited and how the impugned transaction would amount to trade advance or any commercial expediency

Abacus Internaitional Pte Ltd, Mumbai vs. DDIT (It) 1(1), Mumbai

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

ITA 2352/MUM/2014[2006-07]Status: DisposedITAT Mumbai24 May 2022AY 2006-07

Section 143(3)Section 271(1)(c)

interest income on the interest free loan advanced by the assessee to its AE would be assessable as income of the assessee which has business connection / PE in India and the same would be entitled to be adjusted against the expenditure incurred by the assessee by way of marketing services

M/S. Macrotech Developers Ltd (Successor to Ajitnath Hi-Tech Builders Pvt. Ltd), Mumbai vs. Deputy Commissioner of Income Tax, Central Circle 7(3), Mumbai

In the result, both the appeals filed by the assessee are allowed

ITA 5022/MUM/2019[2014-15]Status: DisposedITAT Mumbai23 May 2022AY 2014-15

Bench: Shri M Balaganesh () & Shri Pavan Kumar Gadale ()

Section 143(2)Section 143(3)Section 36(1)(iii)

rate of interest may be given to others with whom the assessee has business relation or with whom he expects to establish business connection or with whom he has other business obligations, present or past. There may be many other reasons also, both business or non-business. If Interest-free

M/S. Macrotech Developers Ltd (Successor to Ajitnath Hi-Tech Builders Pvt. Ltd), Mumbai vs. Deputy Commissioner of Income Tax, Central Circle 7(3), Mumbai

In the result, both the appeals filed by the assessee are allowed

ITA 5021/MUM/2019[2013-14]Status: DisposedITAT Mumbai23 May 2022AY 2013-14

Bench: Shri M Balaganesh () & Shri Pavan Kumar Gadale ()

Section 143(2)Section 143(3)Section 36(1)(iii)

Income Tax Officer Ward-2, Ballari vs. M/S Rajiv Travels, Ballari

In the result, appeal filed by the Revenue and the C

ITA 2639/BANG/2018[2014-15]Status: DisposedITAT Bangalore23 May 2022AY 2014-15

Bench: Shri N. V. Vasudevan & Shri B. R. Baskaranassessment Year : 2014-15 Ito, M/S. Rajiv Travels, Vs. Ward – 2, D. No.20, “Sitram Nivas”, Gsr Complex, K. C. Road, Bellari. Ballari. Pan : Aagfr 0444 M Appellant Respondent C.O. No.02/Bang/2019 (In Ita No.2639/Bang/2018) Assessment Year : 2014-15 M/S. Rajiv Travels, Ito, Vs. D. No.20, “Sitram Nivas”, Ward – 2, Gsr Complex, K. C. Road, Bellari. Ballari. Pan : Aagfr 0444 M Appellant Respondent Assessee By : Shri. B. S. Balachandran, Advocate Revenue By : Shri. Sankar Ganesh K, Jcit(Dr)(Itat), Bengaluru. Date Of Hearing : 29.03.2022 Date Of Pronouncement : 23.05.2022 O R D E R Per B. R. Baskaran:

For Appellant: Shri. B. S. Balachandran, AdvocateFor Respondent: Shri. Sankar Ganesh K, JCIT(DR)(ITAT), Bengaluru

also noticed that the withdrawals have made from the bank by the person named Mr. Imran Basha and the assessee has not explained its business connection with the above said person. Hence, the AO took the view that the explanations given by the assessee are contradictory. Accordingly, he took

ACIT (Ltu)-2, Mumbai vs. M/S Reliance Industrial Ltd., Mumbai

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

ITA 5688/MUM/2019[2018-19]Status: DisposedITAT Mumbai19 May 2022AY 2018-19

Bench: Shri Amit Shukla, Jm & Shri Amarjit Singh, Am आयकरअपीलसं./ I.T.A. No. 5688/Mum/2019 (निर्धारणवर्ा / Assessment Year: 2018-19) M/S Reliance Acit (Ltu-2), Industries Ltd. 29Th Floor, Centre-1, बिधम/ Maker Chamber Iv, World Trade Center, 3Rd Floor, 222, Vs. Cuffe Parade, Nariman Point, Mumbai-400 005 Mumbai-400021 स्थायीलेखासं./जीआइआरसं./ Pan No. Aaacr5055K (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant : Shri Milind Chavan, Ld. Dr By प्रत्यथीकीओरसे/Respondent : Shri Nimesh Vora, Ld. Ar By सुनवाईकीतारीख/ : 11.05.2022 Date Of Hearing घोषणाकीतारीख / : 19.05.2022 Date Of Pronouncement आदेश / O R D E R Per Amit Shukla: The Aforesaid Appeal Has Been Filed By The Revenue Against The Impugned Order Dated 27.06.2019, Passed By Ld. Cit(A)-57

For Appellant: Shri Milind ChavanFor Respondent: Shri Nimesh Vora, Ld

Section 195Section 195(1)

which are not liable to tax in India under the provision of Article 7 of the India –USA DTAA and neither it has any business connection in India as defined in Explanation 2 of Section 9(1)(i) of the Act. 15 I.T.A. No. 5688/Mum/2019 M/s Reliance Industries Ltd. Accordingly

DCIT (It) 4(1)(1), Mumbai vs. M/S Reliance Globalcom.Ltd, Mumbai

In the result, appeal by the Revenue is dismissed

ITA 2319/MUM/2019[2015-16]Status: DisposedITAT Mumbai06 May 2022AY 2015-16

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Amit Khatiwala, C.AFor Respondent: Shri Milind Chavan, Sr. DR

Section 250Section 254(1)Section 254(2)Section 9(1)(vii)

could not be assessed as FTS and was its „business income‟ that was taxable only to the extent of its reference to the "business connection" in India. Also, it was observed by the Tribunal that the turnover (receipts) of Standby Maintenance Charges from TCL i.e attributable to the operations carried ... used, it cannot be further apportioned based on the length of the cable so as to determine profit of the assessee attributable to the business connection in India. 12. The learned representative, however, pointed out that the income of the assessee, which is to be taxed in India