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“force of attraction”

International TaxDTAADTAA23 judgments

The decision most relied on for force of attraction is CTT v. Chunilal Prabhudas and Co. (76 ITR 566), cited in 28 judgments on BharatTax.

Leading authorities on force of attraction

CTT v. Chunilal Prabhudas and Co.
76 ITR 566 · 1970 · High Court
28
citing judgments

Goodwill is the reputation of a business that attracts customers, is viewed as intangible but materially valued, and can be described metaphorically as a seed growing into an oak, a magnet's attracting force, or the differential return of profit.

Judgments citing force of attraction

Oracle Systems Corporation, New Delhi vs. DDIT, New Delhi

In the result, assessee’s appeals in :

ITA 3313/DEL/2013[2005-06]Status: DisposedITAT Delhi02 Jan 2026AY 2005-06

Bench: Shri Vikas Awasthy & Shri Naveen Chandra

For Appellant: Shri G.C. Srivastava, AdvFor Respondent: Shri Indruj Sngh Rai, Spl. Counsel
Section 234ASection 250(1)(a)Section 9(1)(vi)

Method does not give correct arm's length price in transactions of intangibles and that the correct method is 'Profit Split Method". • Partial force of attraction is operable and is applicable 3.2 That on facts and in law the CIT(A) erred in upholding the quantum attributed

Oracle Systems Corporation, New Delhi vs. ADIT, New Delhi

In the result, assessee’s appeals in :

ITA 1836/DEL/2009[2004-05]Status: DisposedITAT Delhi02 Jan 2026AY 2004-05

Bench: Shri Vikas Awasthy & Shri Naveen Chandra

For Appellant: Shri G.C. Srivastava, AdvFor Respondent: Shri Indruj Sngh Rai, Spl. Counsel
Section 234ASection 250(1)(a)Section 9(1)(vi)

Method does not give correct arm's length price in transactions of intangibles and that the correct method is 'Profit Split Method". • Partial force of attraction is operable and is applicable 3.2 That on facts and in law the CIT(A) erred in upholding the quantum attributed

Oracle Systems Corporation, New Delhi vs. ADIT, New Delhi

In the result, assessee’s appeals in :

ITA 1835/DEL/2009[2003-04]Status: DisposedITAT Delhi02 Jan 2026AY 2003-04

Bench: Shri Vikas Awasthy & Shri Naveen Chandra

For Appellant: Shri G.C. Srivastava, AdvFor Respondent: Shri Indruj Sngh Rai, Spl. Counsel
Section 234ASection 250(1)(a)Section 9(1)(vi)

Method does not give correct arm's length price in transactions of intangibles and that the correct method is 'Profit Split Method". • Partial force of attraction is operable and is applicable 3.2 That on facts and in law the CIT(A) erred in upholding the quantum attributed

Oracle Systems Corporation, New Delhi vs. ADIT, New Delhi

In the result, assessee’s appeals in :

ITA 1834/DEL/2009[2002-03]Status: DisposedITAT Delhi02 Jan 2026AY 2002-03

Bench: Shri Vikas Awasthy & Shri Naveen Chandra

For Appellant: Shri G.C. Srivastava, AdvFor Respondent: Shri Indruj Sngh Rai, Spl. Counsel
Section 234ASection 250(1)(a)Section 9(1)(vi)

Method does not give correct arm's length price in transactions of intangibles and that the correct method is 'Profit Split Method". • Partial force of attraction is operable and is applicable 3.2 That on facts and in law the CIT(A) erred in upholding the quantum attributed

Oracle Systems Corporation, New Delhi vs. ADIT, New Delhi

In the result, assessee’s appeals in :

ITA 1833/DEL/2009[2001-02]Status: DisposedITAT Delhi02 Jan 2026AY 2001-02

Bench: Shri Vikas Awasthy & Shri Naveen Chandra

For Appellant: Shri G.C. Srivastava, AdvFor Respondent: Shri Indruj Sngh Rai, Spl. Counsel
Section 234ASection 250(1)(a)Section 9(1)(vi)

Method does not give correct arm's length price in transactions of intangibles and that the correct method is 'Profit Split Method". • Partial force of attraction is operable and is applicable 3.2 That on facts and in law the CIT(A) erred in upholding the quantum attributed

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)

Offshore supply other than PGCIL Contract amounting to Rs.15,74,95,264/- as taxable in India holding it to be receipts following the ‘Force of attraction’ principle. The ld. Counsel further pointed that the Assessing Officer has erred in taxing Global Operation Fees from assessee’s group company amounting

Lahmeyer International Gmbh, Gurgaon vs. DDIT, New Delhi

In the result, appeals of assessee in ITA Nos

ITA 784/DEL/2014[2010-11]Status: DisposedITAT Delhi22 Aug 2025AY 2010-11

Bench: Shri Vijay Pal Rao & Shri Naveen Chandra

For Appellant: Shri Satyam Sethi, AdvFor Respondent: Shri Vedanshu Tripathi, CIT- DR
Section 143(3)Section 144C(13)Section 234ASection 234BSection 234CSection 271(1)(c)

constituted under the contract with Jammu and Kashmir State Power Development Corporation Baglihar Construction Services ('JKSPDC') by applying the rule of 'Force of Attraction' envisaged under the provisions of India- Germany Tax Treaty. 3. Levying interest under section 234A, section 234B and section 234C of the Act. 4 Initiating penalty ... employees of the assessee rendered their services in India for less than 183 days. However, the ld. DR submitted that applying principle of "force of attraction rule", receipts from all the contracts was held to be taxable in India as 'business income', irrespective of the fact whether the assessee

M/S. Lahmeyer International Gmbh, Germany vs. DDIT, New Delhi

In the result, appeals of assessee in ITA Nos

ITA 5634/DEL/2012[2009-10]Status: DisposedITAT Delhi22 Aug 2025AY 2009-10

Bench: Shri Vijay Pal Rao & Shri Naveen Chandra

For Appellant: Shri Satyam Sethi, AdvFor Respondent: Shri Vedanshu Tripathi, CIT- DR
Section 143(3)Section 144C(13)Section 234ASection 234BSection 234CSection 271(1)(c)

constituted under the contract with Jammu and Kashmir State Power Development Corporation Baglihar Construction Services ('JKSPDC') by applying the rule of 'Force of Attraction' envisaged under the provisions of India- Germany Tax Treaty. 3. Levying interest under section 234A, section 234B and section 234C of the Act. 4 Initiating penalty ... employees of the assessee rendered their services in India for less than 183 days. However, the ld. DR submitted that applying principle of "force of attraction rule", receipts from all the contracts was held to be taxable in India as 'business income', irrespective of the fact whether the assessee

Shenhzhen Sdg Information Co. Ltd., Delhi vs. Circle Int. Taxation 3(1)(2), Delhi

Appeal is allowed

ITA 746/DEL/2022[2017-18]Status: DisposedITAT Delhi05 Jun 2025AY 2017-18

Bench: Shri Satbeer Singh Godara & Shri S. Rifaur Rahmanassessment Year: 2017-18 Vs. Commissioner Of Income Tax, Shenhzhen Sdg Information Co. Ltd., International Taxation-3, C/O- Tass Advisors Llp, 62, New Delhi Lower Ground Floor, Pocket 2, Jasola, New Delhi Pan: Aavcs7426C (Appellant) (Respondent) Assessee By Sh. Divyanshu Agrawal, Adv. Sh. Anubhav Rastogi, Adv. Department By Sh. Vijay B Vasanta, Cit(Dr) Date Of Hearing 10.03.2025 Date Of Pronouncement 05.06.2025 Order

Section 263Section 44B

that permanent establishment, whether directly or indirectly. The indirect attribution of profit is basically referring to attribution of additional profit by application of "force of attraction" clause. 8.5 Legal position under Indian DTAAs: whether FAR analysis is approved 8.5.1 Arm's Length principle is the basis of allocation of profit ... profit as it was in direct conflict with provision of Article 7(3) of UN model dealing with computation mechanism and force of attraction clause. Second, by introducing a FAR analysis would bring in all the practical problem of a complete transfer pricing analysis that is presently faced under Article

Bnp Paribas, Mumbai vs. Assistant Commissioner of Income Tax(Internationa Taxation)-Circle 1(3)(1), Mumbai

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

ITA 3416/MUM/2023[2020-21]Status: DisposedITAT Mumbai13 May 2024AY 2020-21

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopal

For Respondent: Ajay Kumar Sharma
Section 143(2)Section 143(3)Section 144CSection 144C(5)Section 270A

bring the interest to article 7 in order to treat the said income as business profit attributable to the PE indirectly by force of attraction in the present case, such situation does not exist and article 11(6), therefore, in our opinion, has no application Further Article

Saab Technologies B.V.(Formerly Known S, Kolkata vs. D.C.I.T., International Taxation, Circle-2(1), Kolkata

In the result, ITA No. 153/KOL/2022 is allowed

ITA 153/KOL/2022[2018-2019]Status: DisposedITAT Kolkata18 Apr 2024AY 2018-2019

Bench: Sri Anikesh Banerjee & Sri Girish Agrawal

Section 143(3)Section 144C

Saab Technologies B.V (Formerly known as Holland Institute of Traffic Technology B.V.). PE, this would in effect be tantamount to applying the force of attraction principle. Moreover, this would violate the principle that various business activity performed by one and the same enterprise, none of which individually constitutes

Standard Chartered Bank, Mumbai vs. DDIT (It) 2(1), Mumbai

In the result, ground raised by the revenue is dismissed

ITA 3458/MUM/2009[2000-01]Status: DisposedITAT Mumbai13 Nov 2023AY 2000-01

Bench: Shri Vikas Awasthy & Shri Gagan Goyalstandard Chartered Bank Taxation Department, 23-25, M. G. Road, 3Rd Floor, Fort, Mumbai-400 001 Pan: Aabcs4681D ..... Appellant Vs. Ddit (Intl. Tax)-2(1) Scindia House, Ballard Estate, N. M. Marg, Mumbai-400 038 ..... Respondent

For Appellant: Shri Madhur Agarwal, Ld. ARFor Respondent: Shri Anil Sant, Ld. DR
Section 14ASection 250Section 40Section 44C

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “I”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL

M/S. Linklaters, Mumbai vs. The DDIT (It) 4(1), Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 3280/MUM/2008[2005-2006]Status: DisposedITAT Mumbai11 Oct 2023AY 2005-2006

Bench: Shri Aby T. Varkey, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blelinklaters V. Ddit (International Taxation) – 4(1) Scindia House, N.M. Road C/O. Deloitte Haskins & Sells Llp Bellard Estate, Mumbai - 400001 Indiabulls Finance Centre Tower 3 28Th Floor, Senapati Bapat Marg Elphinstone Road (West) Mumbai - 400013 Pan: Aabfl2160M (Appellant) (Respondent) Ddit (International Taxation) – 4(1) V. Linklaters Scindia House, N.M. Road C/O. Deloitte Haskins & Sells Llp Bellard Estate, Mumbai - 400001 Indiabulls Finance Centre Tower 3 28Th Floor, Senapati Bapat Marg Elphinstone Road (West) Mumbai - 400013 Pan: Aabfl2160M (Appellant) (Respondent)

Section 143(3)Section 244ASection 44C

taxable in India. The Tribunal though in AY 1995-96 had decided this issue against the assessee after invoking the principle of “force of attraction”, however, later on, the Special Bench of the Tribunal in the case of ADIT vs Clifford Chance reported in [2013], (143 ITD 1) has decided

DDIT (It)-4(1), Mumbai vs. M/S. Linklaters, Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 3039/MUM/2008[2005-2006]Status: DisposedITAT Mumbai11 Oct 2023AY 2005-2006

Bench: Shri Aby T. Varkey, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blelinklaters V. Ddit (International Taxation) – 4(1) Scindia House, N.M. Road C/O. Deloitte Haskins & Sells Llp Bellard Estate, Mumbai - 400001 Indiabulls Finance Centre Tower 3 28Th Floor, Senapati Bapat Marg Elphinstone Road (West) Mumbai - 400013 Pan: Aabfl2160M (Appellant) (Respondent) Ddit (International Taxation) – 4(1) V. Linklaters Scindia House, N.M. Road C/O. Deloitte Haskins & Sells Llp Bellard Estate, Mumbai - 400001 Indiabulls Finance Centre Tower 3 28Th Floor, Senapati Bapat Marg Elphinstone Road (West) Mumbai - 400013 Pan: Aabfl2160M (Appellant) (Respondent)

Section 143(3)Section 244ASection 44C

taxable in India. The Tribunal though in AY 1995-96 had decided this issue against the assessee after invoking the principle of “force of attraction”, however, later on, the Special Bench of the Tribunal in the case of ADIT vs Clifford Chance reported in [2013], (143 ITD 1) has decided

Lahmeyer Holding Gmbh, Germany vs. DDIT, New Delhi

In the result, the appeals are partly allowed

ITA 5615/DEL/2011[2008-09]Status: DisposedITAT Delhi31 Mar 2023AY 2008-09

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2008-09 Lahmeyer International Vs. Ddit, Gmbh, Circle-3(2), Friedberger Strasse 173, International Taxation, 61118 Bad Vilbel, New Delhi Deutschland (Germany) Pan :Aaacl6802E (Appellant) (Respondent) With Assessment Year: 2008-09 Lahmeyer Holding Gmbh Vs. Ddit, (Formerly Lahmeyer Circle-3(2), International International Gmbh), Taxation, Friedberger Strasse 173, New Delhi 61118 Bad Vilbel, Deutschland (Germany) Pan :Aaacl6802E (Appellant) (Respondent)

Section 234BSection 234CSection 271(1)(c)Section 44D

constituted under the contract with Jammu and Kashmir State Power Development Corporation — Baglihar Construction Services by applying the rule of 'Force of Attraction' envisaged under the provisions of India-Germany Tax Treaty . 4. Levying interest under Section 234B and section 234C of the Act. 5. Initiating penalty proceedings under section ... projects are existing or not, since, the assessee had a PE in India in the form of JKSPDC-Baglihar Project, applying the Force of Attraction Rule all receipts earned in India would be connected to the said PE. Hence, taxable under Section 44DA. Accordingly, he brought to tax the receipts

Lahmeyer International Gmbh, Germany vs. DDIT, New Delhi

In the result, the appeals are partly allowed

ITA 5614/DEL/2011[2008-09]Status: DisposedITAT Delhi31 Mar 2023AY 2008-09

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2008-09 Lahmeyer International Vs. Ddit, Gmbh, Circle-3(2), Friedberger Strasse 173, International Taxation, 61118 Bad Vilbel, New Delhi Deutschland (Germany) Pan :Aaacl6802E (Appellant) (Respondent) With Assessment Year: 2008-09 Lahmeyer Holding Gmbh Vs. Ddit, (Formerly Lahmeyer Circle-3(2), International International Gmbh), Taxation, Friedberger Strasse 173, New Delhi 61118 Bad Vilbel, Deutschland (Germany) Pan :Aaacl6802E (Appellant) (Respondent)

Section 234BSection 234CSection 271(1)(c)Section 44D

constituted under the contract with Jammu and Kashmir State Power Development Corporation — Baglihar Construction Services by applying the rule of 'Force of Attraction' envisaged under the provisions of India-Germany Tax Treaty . 4. Levying interest under Section 234B and section 234C of the Act. 5. Initiating penalty proceedings under section ... projects are existing or not, since, the assessee had a PE in India in the form of JKSPDC-Baglihar Project, applying the Force of Attraction Rule all receipts earned in India would be connected to the said PE. Hence, taxable under Section 44DA. Accordingly, he brought to tax the receipts

Smiths Detection Asia Pacific Pte Limited, Delhi vs. DCIT, Circle-3(1)(2) Int. Taxation, New Delhi

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

ITA 2258/DEL/2022[2019-20]Status: DisposedITAT Delhi22 Feb 2023AY 2019-20

Bench: Shri N.K. Billaiya & Shri Anubhav Sharma

For Appellant: ShriHimanshu Sinha, AdvFor Respondent: Shri Sukesh Kumar Jain – CIT-DR
Section 143(3)

ITAT Rules. 19. The core issue which needs to be addressed at the outset is to what extent the Force of Attraction Rule apply in the case of off shore supply/sales of goods/merchandise. 20. The Hon'ble Supreme Court in the case of Hyundai Heavy Industries Co. [supra

Ubs Ag, Mumbai vs. DCIT (It) 4(3)(1)

In the result, the appeal by the Revenue is dismissed

ITA 842/MUM/2016[2011-12]Status: DisposedITAT Mumbai09 Dec 2022AY 2011-12

Bench: Shri M. Balaganesh & Shri Sandeep Singh Karhail

For Appellant: Shri Dinesh Bafna a/wFor Respondent: Ms. Vatsalaa Jha
Section 143(2)Section 143(3)Section 144C(13)Section 234Section 92C

circumstances of the case, the Ld. DRP erred in holding the income from securities as capital gain without appreciating that in view of force of attraction principle enshrinest in Article 7(1) of the DTAA with Switzerland, the income of assessee form trading in security as FII being similar

DCIT (It) 4(3)(1), Mumbai vs. Ubs Ag, Mumbai

In the result, the appeal by the Revenue is dismissed

ITA 1347/MUM/2016[2011-12]Status: DisposedITAT Mumbai09 Dec 2022AY 2011-12

Bench: Shri M. Balaganesh & Shri Sandeep Singh Karhail

For Appellant: Shri Dinesh Bafna a/wFor Respondent: Ms. Vatsalaa Jha
Section 143(2)Section 143(3)Section 144C(13)Section 234Section 92C

circumstances of the case, the Ld. DRP erred in holding the income from securities as capital gain without appreciating that in view of force of attraction principle enshrinest in Article 7(1) of the DTAA with Switzerland, the income of assessee form trading in security as FII being similar

Itochu Corporation, Japan vs. ACIT (International Taxation), Circle-2(1)(1), New Delhi

The appeals of the assessee are partly allowed for statistical purposes

ITA 7615/DEL/2018[2015-16]Status: DisposedITAT Delhi24 Nov 2021AY 2015-16

Bench: Shri R. K. Pandaa N D Ms. Suchitra Kamblei.T.A. No. 360/Del/2017 (A.Y. 2013-14) A N D I.T.A. No. 7615/Del/2018 (A.Y. 2015-16) (Through Video Conferencing) Itochu Corporation, Acit, 5–1, Kita-Aoyama, Vs. (International Taxation) 2–Chome, Minato-Ku Circle 2(1)(1), Tokyo 107-8077, Japan. New Delhi. Pan: Aabci5567L (Appellant) (Respondent)

For Appellant: Shri Ajay Vohra, Sr. Adv &For Respondent: Shri Satpal Gulati [CIT]–DR

profits attributable to the alleged PE with respect to direct sales made by the appellant to its Indian customers by applying the Force of Attraction Rule without appreciating the fact that there is no such provision in the Indian - Japan DTAA. 6. Without prejudice to the above ground ... alleged PE with respect to direct 7 AND ITA No. 7615/Del/2018 sales made by the appellant to its Indian customers by applying the ‘Force of Attraction’ rule without appreciating the fact that there is no such provision in the Indian-Japan DTAA. 7. Without prejudice to the above grounds