Indian subsidiary of a Non-resident parent company wants to pay commission to its parent company based in US. The commission is payable for the business contacts provided by the foreign parent compant to its subsidiary in India. e.g. Foriegn parent company asked its subsidiary to contact XYZ in India and do its work. In return, Indian subsidiary wants to pay commission to its foreign parent company for the business generated.
What would be the situation if there was no holding - subsidiary relationship?
In my opinion, it could only be covered u/s 9(1) and that too not certain, because i guess it is not necessary that subsidiary automatically qualifies for the business connection of the foreign company in India. This is beacuse the subsidiary is not carrying out the business of foreign parent company in India. The subsidiary is carrying its own business and paying commission to the foreign parent company for the additional business generated.
Any expert views???
CAclubindia
