PROFIT OF A WHOLLY OWNED SUBSIDIARY OF AN INDIAN COMPANY WHICH IS SITUATED IN UAE, WHETHER TAXABLE IN THE HANDS OF INDIAN HOLDING COMPANY?
Amir
(Learner)
(4016 Points)
Replied 13 February 2010
Dear Sameer,
Taxability will depend upon Residential Status
A company is said to be resident in India in any previous year, if—
(i) it is an Indian company ; or
(ii) during that year, the control and management of its affairs is situated wholly in India.
If the Subsidary is resident company thenit's global income will be taxable..
If the subsidary company is non resident(or what is called as "Foreign Company") then Profits of subsidary will not be taxable in India as such except -
1) Sec 5 explains the taxability of Incomes of Non residents as under
(a) received or is deemed to be received in India in such year by or on behalf of such person ; or
(b) accrues or arises or is deemed to accrue or arise to him in India during such year.
2) Apart from this if subsidary company pays dividend to it's Indian parent, then that dividend will be taxable in the hands of Parent Company..
C.Balaji
(Learner)
(1867 Points)
Replied 13 February 2010
Residential Status
An indian co. is always Resident in india irrespective of the place where contron and management is situated.....
Incase of any other co.
Control and management wholly in India - Resident
Control and management wholly or partially outside india - Non-Resident....
A Partnership firm or an AOP or a Co. can never be Ordinary or Not ordinary resident in India...
and for Non-Resident...
Income earned and received in India - Taxable
Income earned in India but received outside India - Taxable
Income earned outside India but received in India - Taxable
Income earned and received outside india - Not taxable
Income earned and received outside India but business is controlled in india - not taxable
Past untaxed profits brought into India - not taxable....
Analysis of 20 GST Notices (including 2 Appeals) and Practise on Drafting(with recording)
CAclubindia
