Detemination of pe

This query is : Resolved

bhoop (Querist)
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04 August 2011 Dear Experts

We are a 100 % subsidry of Nihon Denkei Co. Japan and registered under Companies Act 1956 of India. Now our Japan company sold a equipment with relevent software to our Indian customer. Now that customer has raised some poinst as follow:-

1. Customer asking for a declaration for whether Indian company is a PE of Japan company or not. Becuase due to software service is comes under Tax Deduction.

2. If we are a PE of Japan Company than customer asking for PAN no. but our Japan Company have not PAN no. so in that case can we provide our Indian Company PAN no.

3. If we provide our India company PAN no. than they deducted TDS so how is treated in account of Indian Company and can Indian Company claim for refund that TDS in their return.

So please advice on above points and also provide latest circular/notification/Court Judgement regarding the above points.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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05 August 2011 Hi Bhoop,

Answer to your queries are as follows:-

1.You can provide that Indian Company is not PE of Japanese Company. The same has been provided under Article 5(9) of India-Japan DTAA which reads as under"The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other
Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other". This simply means Japanese Company having a subsidiary in India shall not mean that it has a PE in India.

2.No, you can't give PAN of Indian Co.,you need to give the same for Japanese company. Obtain PAN for Japanese Company.

3. N.A.

Please feel free for any further clarification in the matter.

Anuj
+91-9810106211
femaquery@gmail.com