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Income of company with no presence in India is not taxable: ITAT Taxation

Income of company with no presence in India is not taxable: ITAT

India Blooms News Service | @indiablooms | 19 Nov 2021, 08:13 pm

New Delhi/IBNS: A tax tribunal has ruled that domestic taxes cannot be levied on a company that doesn't have any presence in India, media reports said.

The ruling was given by the Delhi Income Tax Appellate Tribunal (ITAT) in the case of ESPN, the sports channel, versus the tax authorities, ET reported.

The tribunal held that ESPN did not have a permanent establishment (PE) in India or a business connection in India, hence domestic taxes cannot be levied on the company.

The report said ESPN was selling advertisement slots and programme sponsorship in India through an Indian company-ESPN Software India.

The intermediary company would acquire advertisement time from the Mauritius entity or would further sell that to Indian advertising agencies, said the ET report.

The tax department contended that the income generated in this way is taxable as the payment was made by the Indian companies for the advertisements.

But the tribunal ruled ESPN was covered under India's tax treaty-double tax avoidance agreement (DTAA)-with Mauritius, and that India doesn't have a right to tax the company, stated the ET report.