Law:

Section:

[2010] 188 Taxman 304 (AAR)/[2010] 323 ITR 598 (AAR)/[2010] 229 CTR 322 (AAR) [2010] 188 TAXMAN 304 (AAR - NEW DELHI) AUTHORITY FOR ADVANCE RULINGS (INCOME-TAX), NEW DELHI Laird Technologies India (P.) Ltd., In re JUSTICE P.V. REDDI, CHAIRMAN AND J. KHOSLA, MEMBER A.A.R. NO. 793 OF 2008 FEBRUARY 18, 2010 Section 9 of the Income-tax Act, 1961 read with articles 5 and 7 of the Double Taxation Avoidance Agreement between India and USA - Income - Deemed to accrue or arise in India - Applicant is an Indian company, a group company of Laird U.K. - It is Laird's first manufacturing facility in India and is, inter alia, engaged in business of designing and manufacturing antennas and battery packs for mobile phone industry - Laird USA, which is a unit of Laird UK, has executed a Product Purchase Agreement (PPA) with Nokia and has negotiated an arrangement with Nokia to manufacture and supply products to Nokia Corporation globally - Laird USA entered into an assignment agreement under which it irrevocably assigned all its beneficial rights, titles, interests, obligations and duties in connection with supply to Nokia India under PPA in favour of applicant for a period of five years - Aforesaid agreement was executed outside India and consideration under agreement would also be received by Laird USA outside India - There is nothing to show that activities of applicant are devoted wholly or almost wholly to or on behalf of Laird USA and from subsequent events, it is clear that Laird USA has gone out of picture after applicant had started manufacturing and supplying goods - Whether, on facts, amount of consideration received by Laird USA from applicant is in nature of business profit that has accrued or arisen in India, but in absence of any permanent establishment in India, same is not liable to be taxed, having regard to article 7.2 of DTAA - Held, yes FACTS The applicant is an Indian company, a group company of 'Laird' U.K. It is Laird's first manufacturing facility in India. It is, inter alia, engaged in the business of designing and manufacturing antennas and battery packs for the mobile phone industry. It has business dealings with leading electronic manufacturers in…

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