Law:

Section:

Section 4, read with section 28, of the Income-tax Act, 1961 - Income - Chargeable as - Applicant-trust, a tax resident of USA, has been registered as a FII with SEBI under SEBI (Foreign Institutional Investors) Regulations - It makes investment in securities of various companies in India under FII regime - Whether profits arising to applicant from sale of portfolio investments in India will be treated as business income of applicant - Held, yes - Whether as applicant is not entitled to avail benefits of terms of DTAA between India and USA, such business income of applicant will be taxable in India under Act - Held, yes FACTS The applicant-trust is a tax resident of USA and established by General Electric Company and its participating affiliated companies (GE) by an indenture on 28-12-1927. The applicant has various portfolio investments under it which focusses on different types of investments, different sectors and different geographical regions. The applicant holds approximately US $ 43 billion in worldwide assets of which approximately US $ 80 million (approximately 0.19% of the worldwide assets) are invested in Indian securities. The applicant is managed by a board of trustees which has exclusive authority and discretion to manage and control the assets of the applicant. The board has delegated to GE Asset Management (GEAM) the sole and the exclusive authority to manage the assets of the applicant. The applicant makes investments in India under the Foreign Institutional Investor regime formulated by the Securities and Exchange Board of India. The applicant has been registered as a FII with the SEBI as a sub-account of GEAM under the SEBI (Foreign Institutional Investors) Regulations, 1995 (FII Regulations). Accordingly, the applicant has been trading in securities in India continuously. A bank has been appointed as a domestic custodian in India in respect of Indian investments. As per the agreement, the main duties of the bank include physical holding of securities, making and receiving payments for the purchase and sale of securities. The applicant states that it does not have any employee, branch, office or place of business in India nor does it have…

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