Law:

Section:

Ordinarily, profits of a business accrues at place of formation of contract but factors like where contract is carried out or acts are done under contract have an important bearing on decision of a question regarding place of accrual of profit Section 5, read with section 9, of the Income-tax Act, 1961 and Double Taxation Avoidance Agreement with USA - Income - Place of accrual of - Whether ordinarily, profits of a business accrues at place of formation of contract but factors like where contract is carried out or acts are done under contract have an important bearing on decision of a question regarding place of accrual of profit - Held, yes - Applicant, a non-resident company of USA, in response to tenders floated by State Government of Andhra Pradesh (GOAP) in respect of project for installation of remote stations, prepared and signed proposals in USA and submitted same - GOAP awarded two contracts to applicant - Accordingly, applicant through its authorised country manager, N, at Hyderabad entered into contracts with GOAP - Each contract comprised of two parts (i) supply of goods and erection of three to six specimen remote stations and on spot training of personnel, and (ii) providing local material and services etc. - In regard to first part of contract, goods were delivered to Air India in USA which was appointed as carrier on instructions of GOAP and documents of title were sent by courier to State Bank of Hyderabad, at Hyderabad - In regard to second part of contract, a Memorandum of Understanding (MOU) was executed between applicant and 'A' for supplying all local integration material, providing local and other services and also for giving warranty services for period of 2 years and annual maintenance services for a total period of 4 years for which A will recover cost from applicant - Consideration for first part is payable to applicant for both contracts in US dollars in USA and consideration for second part is payable in Indian rupees in India - Entire payment is to be made to applicant by transfer of amount to a Bank, in USA - Whether on facts income/profit will accrue/arise to applicant in India under section 5 - Held, no - Whether applicant can…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492