Applicability of Section 44DA of income tax act

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chandanshah (Querist)
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13 May 2011 Respected Seniors,
I want to know about the applicability of sec 44DA .

As per DTAA in my case there is Service PE .
If we see Domestic Income tax ,Sec 44DA will apply when there is PE.

if we See the definition of PE under income tax act u/s 92F(iiia) -
Permanent Establishment referred to in clause (iii) i.e. Enterprise includes a fixed place of business through which the business of enterprise is wholly or partly carried on.

i am confused with the word includes.
Can we say It covers even Service PE?
As per DTAA provision
There are 4 types of PE
1.Fixed based PE
2.Agency PE
3.Installation/Construciton PE
4.Service PE.

As per my Understanding it is only the DTAA where there is concept of Service PE.

So coming back to Question what does includes mean?
can it include what is not in the income tax act , which is only in the DTAA?
Please guide me.
Thank you in Advance.

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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14 May 2011 Section 92F applies only to international transaction defined in Chaptr X
that is it applies only to transactions between associated enterprises
in ur case as per facts shared by u this section will not apply
CA MANOJ GUPTA
JODHPUR
09828510543

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CA. Krishna K Neeraj

CA. Krishna K Neeraj (Expert)
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14 May 2011 Please read section 44DA of Income Tax Act again . It clearly mentions that section 44DA applies where non resident or foreign company carries on business through PERMANENT ESTABLISHMENT situated therein OR PERFORMS PROFESSIONAL SERVICES FROM A FIXED PLACE OF PROFESSION situated therein...... This implies that concept of service PE is already included in the section 44DA.

I also DO NOT AGREE with expert Manoj Gupta as by virtue of explanation to Section 44DA, meaning of 'permanent establishment' in section 44DA has been borrowed from definition of permanent establishment given in section 92F(iiia).

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CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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14 May 2011 thank you Krishna ji

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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14 May 2011 In my view concept of Service PE is NOT built in sec. 44DA.

First the concept of service PE needs to be undrstood which signifies renedering of services through personnel which can be at places which are not fixed . The criteria is the physical presence in no. of days of employees/partners of foreign enterprise.

As per definition under sec 92F(iiia)and 44DA the whole stress is on words "FIXED PLACE".

In the present case the income shall be chargeable under Article 7 as the foreign Company(in words of author FC forms a SERVICE PE, but exact nature of facts can change the whole situation)has a service PE in India.

Anuj
0-9810106211

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Ruchira Gupta

Ruchira Gupta (Expert)
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20 November 2012 Hello,does a liaison office of a foreign company undertaking only coordination activities be termed as permanent establishment of that company in India?
Secondly, is income accruing in India for technical services rendered by foreign technicians liable for TDS in India?
A foreign company has a liaison office in India purely for the purposes of coordination. This company sends its technicians to Indian companies for providing technical services for which the payment is directly made to the foreign company. Is the liaison office a PE in terms of Income Tax Act and does the income liable for TDS under the DTAA?

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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22 November 2012 You need to check the applicable treaty for force of attraction rule .

Anuj
Femaquery@gmail.com