“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, Stafford, United Kingdom vs. Deputy Commissioner of Income Tax, Circle Int Tax 3(1)(1)Del, Delhi

In the result, appeal of the assessee is allowed in terms aforesaid

ITA 2042/DEL/2025[2022-23]Status: DisposedITAT Delhi10 Nov 2025AY 2022-23

Bench: Shri Vikas Awasthy & Shri Brajesh Kumar Singh[Assessment Year: 2022-23] Uk Grid Solutions Limited, The Deputy Commissioner Of Income St Leonards Building, Harry Tax, Circle International Taxation Kerr Dive, Stafford St16 1Wt, Vs -3(1)(1), Civic Centre, Minto Road United Kingdom-99999 New Delhi-110002 Pan-Aaica6271A Assessee/Appellant Revenue/Respondent

Section 143(3)Section 44BSection 9(1)(vii)

issues raised by the assessee in appeal is as under:- GOA ISSUES No. 3. Taxability of Offshore supplies in India 4. Appellant had business connection in India 5. Single composite contract was artificially split into three separate contracts 6. There exists fixed place PE in India 7. There exists dependent ... appeal 4. Taxability of offshore supply 9.8.2 and 28 10 and 29 in India 5 Whether assessee had 9.8.1 and 29 10 and 30 business connection in India 7 Whether the assessee 9.8.4 and 25 10 and 27 constitutes dependent agent (PE) Whether the assessee had 26 28 constitutes fixed

Matrix Sea Foods India Limited, Hyderabad vs. ACIT (OSD) Ward-16(4), Hyderabad

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

ITA 102/HYD/2022[2015-16]Status: DisposedITAT Hyderabad07 Nov 2025AY 2015-16

Bench: Shri Ravish Sooda N D Shri Madhusudan Sawdiaआ.अपी.सं /Ita No.102/Hyd/2022 (िनधा"रण वष"/Assessment Year: 2015-16) M/S Matrix Sea Foods Vs. Acit ( Osd ) India Limited, Hyderabad Ward 16(4) Pan:Aaecm4113H Hyderabad (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri Mohd. Afzal, Advocate राज" व "ारा/Revenue By:: Shri Gurpreet Singh, Sr.Dr सुनवाई की तारीख/Date Of Hearing: 30/10/2025 घोषणा की तारीख/Pronouncement: 07/11/2025 आदेश/Order Per Madhusudan Sawdia, A.M.:

For Appellant: Shri Mohd. Afzal, AdvocateFor Respondent: : Shri Gurpreet Singh, Sr.DR

Section 143(3)

travel coupon. The Ld. AR emphasized that the assessee had no direct control over the ultimate beneficiaries of the travel coupons, and that the business connection of the actual travelers was irrelevant to the allowability of the expenditure since the incentive was granted purely based on the dealer’s performance ... promotion activity. The disallowance was made only on the ground that some of the persons who availed the trips did not have a direct business connection with the assessee or its dealers. In our considered view, this reasoning cannot be sustained. Once the entitlement for a foreign or domestic tour

Nirbhay Consultants Private Limited, Ahmedabad vs. Income Tax Officer Ward 3(1)(1), Ahmedabad

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

ITA 1980/AHD/2024[2011-12]Status: DisposedITAT Ahmedabad04 Nov 2025AY 2011-12

Bench: Dr. Brr Kumar & Ms. Suchitra Kambleassessment Year 2011-12

For Appellant: Shri Sunil Talati, A.RFor Respondent: Shri Kamal Deep Singh, Sr. D.R

Section 142(1)Section 147Section 148Section 250Section 68

this is the genuine business arrangement for the repayment of loan to Nirbhay Capital Service Pvt. Ltd. The assessee has established the nexus of business connection. Thus, the Assessing Officer as well as the CIT(A) ignored this crucial fact, therefore, ground nos. 2 and 3 is allowed

Oxbow Energy Solutions B.V., Thane vs. The Deputy Commissioner of Income, Mumbai

The appeal of the assessee is partly allowed

ITA 4769/MUM/2023[2021-2022]Status: DisposedITAT Mumbai04 Nov 2025AY 2021-2022

Bench: Shri Amit Shukla, Jm & Ms Padmavathy S, Am

For Appellant: Shri Nishant Thakkar, Ms. JasminFor Respondent: Shri. Krishna Kumar, Sr. DR

Section 143(3)

income liable to tax in India. 2 Oxbow Energy solutions B.V. 2. The AO/DRP erred in holding that ASSESSEE has a business connection in India and that income is deemed to accrue to it on account of such business connection. 3. The AO/DRP erred in holding that ASSESSEE ... salaries, officer rent, travel and normal office running expenses. The assessee further submitted that the activity of the LO does not constitute any business connection in India giving rise to Permanent Establishment (PE) in India. The nature of activity carried on by the LO has submitted before

Skechers Sarl, Mumbai vs. The Assistant Commissioner of Income Tax 4(2)(1), Mumbai

In the result the appeal filed by the assessee stands partly

ITA 2028/MUM/2025[2022-23]Status: DisposedITAT Mumbai03 Nov 2025AY 2022-23

Bench: Smt. Beena Pillai () & Smt. Renu Jauhri ()

Section 143(3)Section 144CSection 144C(13)Section 153Section 234BSection 270A

thus submitted that the said income shall qualify as business income. It was also further stated that, in the absence of PE/ business connection in India, the said business income shall not be liable to tax in India as per Article 7 of India-Swiss Double Taxation Avoidance Agreement (India ... that, the income shall be taxable as per provisions of the Act as income is deemed to accrue or arise in India because of business connection in India on account of SEP. 3.8 After considering the submissions made by the assessee, the Ld.AO passed draft assessment order on 29/03/2024, proposing

Hello Textiles, Navapur vs. Income Tax Officer, Ward-4, Dhule

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

ITA 1550/PUN/2025[2010-2011]Status: DisposedITAT Pune31 Oct 2025AY 2010-2011

Bench: Shri Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.1550/Pun/2025 िनधा"रण वष" / Assessment Year : 2010-11 Hello Textiles, Vs. Ito, Ward-4, Dhule. At Navapur, Taluka Navapur, Dist. Nandurbar- 425418 Pan : Aagfh1028P Appellant Respondent Assessee By : Shri Sandeep Rathi Revenue By : Shri Harshit Bari Date Of Hearing : 19.08.2025 Date Of Pronouncement : 31.10.2025 आदेश / Order Per Vinay Bhamore, Jm: This Appeal Filed By The Assessee Is Directed Against The Order Dated 30.04.2025 Passed By Ld. Cit(A)/Nfac For The Assessment Year 2010-11. 2. Facts Of The Case, In Brief, Are That The Assessee Is A Partnership Firm & Has Not Furnished Its Original Return Of Income For The Period Under Consideration. On The Basis Of Information Received On 28.03.2017 From The Dy. Director Of Income Tax (Inv.)

For Appellant: Shri Sandeep RathiFor Respondent: Shri Harshit Bari

Section 142(1)Section 143(3)Section 147Section 148Section 69

Ahmedabad 3 received an amount of Rs.16,90,000/- in his bank account from one Hello Textiles. However, the assessee denied to have any business connection with Silver Shine Exports and also denied to have transferred any amount to the above concern. The Assessing Officer completed the assessment

M/S Enea Software Inc., India vs. Deputy Commissioner of Income-Tax, Circle Int. Tax 2(2)(2), New Delhi

In the result, the appeal of the assessee is allowed

ITA 986/DEL/2025[2022-23]Status: DisposedITAT Delhi31 Oct 2025AY 2022-23

Bench: Shri Vikas Awasthy & Shri Brajesh Kumar Singh[Assessment Year: 2022-23] M/S Enea Software Inc. Deputy Commissioner Of (Formerly Known As Openwave Income Tax, Circle Int. Tax Inc.), 1St Floor, Vs 2(2)(2), Civic Centre, Mobility Quattro Iconic Plot No. 273, Minto Road, Udyog Vihar, Phase 2, New Delhi. Gurugram, Haryana-122015 Pan- Aabco7261M Assessee Revenue

Section 142(1)Section 143(2)Section 144C

assessee is engaged in providing services relating to Transmission Control Protocol and Video Optimization, Solution to Telecom Operators across the Globe. It has no business connection or Permanent Establishment ("PE") in India. Being a tax-resident of USA and a non-resident for the purposes of Act in India

Deputy Commissioner of Income Tax, Jalandhar vs. Ankush Marwaha, Jalandhar

In the result, all the appeals filed by the revenue are dismissed

ITA 392/ASR/2024[2012-13]Status: DisposedITAT Amritsar30 Oct 2025AY 2012-13

Bench: Sh. Manoj Kumar Aggarwal & Sh. Udayan Dasgupta

For Appellant: Sh. K. Mehboob Ali Khan, CIT-DR

Section 153ASection 250Section 69A

also an affidavit confirming the fact that the same person is running business in his own name and we do not have any business connection with him.” 17 I.T.A. Nos. 265/Asr/2024 and Ors. Assessment Years: 2011-12 and Ors. Sir, it is submitted that addition has been made