16 April 2018
My company is basically a US based company and its back office is at noida. Also the company has open its indian concern in private limited form.
Now the question arise here that is the Indian company will be agent for us company because there is no shareholder or ownership linked in indian concern. different director , a friend here in india is appointed in management and no other transactions.
only expense reimbursement done by us company for the work done here.
Further the back office do data entries , salaries for employees work for us company paid by here in indian co., and in turn foriegn account transfer amount to indian bank account.
25 July 2024
Based on the information provided, here's an assessment of the status of both companies:
### US Based Company (Foreign Company)
1. **Ownership and Control**: The US based company is the parent or foreign entity that owns the Indian private limited company.
2. **Business Operations**: It primarily operates in the US and has established a back office in Noida, India, which operates as its subsidiary or extension for certain business functions.
3. **Legal Status**: It remains a foreign company under the jurisdiction of US laws, even though it has operations in India.
### Indian Private Limited Company
1. **Ownership and Management**: The Indian private limited company is registered under Indian laws and regulations. It operates under the management of directors appointed locally in India, including a friend who manages operations.
2. **Nature of Operations**: It functions as a back office for the US company, handling tasks such as data entry, payroll processing for employees working for the US company, and receiving expense reimbursements from the US company.
3. **Legal Relationship**: The Indian company is a separate legal entity from the US company, despite being owned by it. It acts as a service provider or support function to the US company, carrying out operations as per the directives and requirements of the US company.
### Agent vs. Foreign Company
- **Agent Relationship**: From the description provided, the Indian private limited company does not appear to be acting as an agent of the US company in the strict legal sense. An agent typically acts on behalf of and represents the interests of another party (the principal) in transactions or business dealings.
- **Subsidiary Relationship**: Instead, the Indian company is more likely operating as a subsidiary or a branch office of the US company. It conducts operational activities under the control and management of the US company but maintains a separate legal identity in India.
### Conclusion
Based on the operations described, the Indian private limited company is functioning as a subsidiary or branch office of the US company. It is not acting as an agent in a legal sense, but rather as an extension of the US company's operations in India. It's important to ensure compliance with Indian corporate, tax, and regulatory requirements, as well as any cross-border transfer pricing regulations that may apply to transactions between the US company and its Indian subsidiary.
CAclubindia
