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Internal
Assignment Applicable for December 2017 Examination
Taxation_Direct_and_Indirect
Question 1
Mr. Chattur, is a citizen of Germany came
to India as a tourist in the previous year 2016-17 and stayed in India for a
period of 162 days. He liked the south east part of the country and decided to
explore all the tourist places there so he stayed in India throughout the year
2015-16. However, in the year 2013-14, 2014-15 he visited India in two
International Conferences and his period of stay was 26 days and 18 days
respectively. Discuss in the light of the various applicable provisions of
Income Tax Act- His residential status for AY2017-18 and the necessity to
determine his residential status.
Question 2
Mr. Thakkar aged 38 years furnishes the
following details with regard to his options exercised for tax planning purpose
for the year ending as on 31.03.2017 a) Has taken Life insurance policy as on
30.4.2016 from Bajaj Alliance for a capital sum assured Rs.2.5 lacs, premium
paid for the same Rs75000 b) Contribution made by a bearer cheque towards
Public Provident Fund account of his father Rs20000 c) Paid Rs85000 to a friend
towards housing loan on a property taken, the property is situated at Ratlam.
d) Subscription to units of mutual fund referred under section 10(23D) for
Rs130000. e) Contribution made towards Public Provident Fund account of his
spouse Rs90000. He wants to know about the gross total amount which he can
claim as deduction while computing his total income. Are there any provisions
available under the Indian Income Tax Act for the same?If yes, then discuss how
the relevant provision will be helpful, give adequate reasons supporting the
answer and also calculate the amount eligible for deduction under section 80 C.
Question 3 The Assessing officer in the
decided case (GE Energy Parts Inc vs. ADIT, ITAT Delhi) examined the taxability
of income of GE Overseas under the Act as well as the Double Taxation Avoidance
Agreement. He did not accept the contention of the assessee that the sale
consideration was not taxable in India as the title in respect of the
equipment’s was transferred outside India and the payments were also received
outside India. He held that a lot of activities relating to marketing and sales
took place in India. Further, the negotiations of prices also took place in
India. These facts, in the opinion of the AO, were clear indicators of the GE
India securing orders for GE Overseas. He further found that GE Overseas, by
remotely sitting in foreign countries, could not make any sales, without the
active involvement of GE India. This was held to be a business connection of GE
Overseas in India in terms of section 9 of the Act. The AO, therefore, held
that all the profits did not accrue or arise to the assessee in the foreign
soil, but part of such profits arising in India, corresponding to the
activities carried out in India, was chargeable to tax under the Act. Such
income accruing or arising was held to be liable to tax as per the provisions
of section 5(2) of the Act. Simply put, the AO has made out a case that the GE
overseas entities were having business connection under the Act as well as
permanent establishment under the DTAA in India in all the years under
consideration.
(link:
http://itatonline.org/archives/ge-energy-parts-inc-vs-adit-itat-delhi-permanent-establishment-entire-law-explained-on-whether-the-deputation-of-personnel-by-a-foreign-company-to-assist-the-indian-subsidiaries-in-negotiations-mark/)
a) In the context of above mentioned
cases, discuss what can be the objectives and importance of framing rules with
respect to taxation of a business concern which operates in more than one
nation from taxation perspective?
b) Elaborate, why the assessing officer
is of the contention to treat GE India as a permanent establishment in the
given case?
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