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February 2025

Article 4 and 12 of India-USA DTAA — Single Member LLC is a taxable entity under US Tax laws, hence entitled to a beneficial rate under the DTAA.

By Geeta Jani | Dhishat B Mehta | K. Prasanna, Chartered Accountants
Reading Time 3 mins

13. General Motors Company USA vs. ACIT, International Taxation

[2024] 166 taxmann.com 170 (Delhi - Trib.)

ITA No: 2359 and 2360 (Delhi) of 2022

A.Y.: 2014-15 & 2015-16

Dated: 5th September, 2024

Article 4 and 12 of India-USA DTAA — Single Member LLC is a taxable entity under US Tax laws, hence entitled to a beneficial rate under the DTAA.

FACTS

General Motors Company USA was a single-member LLC incorporated under the laws of the USA that received fees for technical/included services from two Indian entities. The Assessee claimed the rate of taxation was 15% as per Article 12 of the India-USA DTAA, which is beneficial compared to the rate of 25% under Section 115A for the relevant AY.

The AO believed that the LLC was not subjected to taxation in its own hands as per US tax laws and could not qualify as a 'resident' under Article 4 of DTAA. Further, the LLC is not liable to tax in US as it is a fiscally transparent entity and is not partnership or trust to get covered by Article 4(1)(b) of the treaty.. Accordingly, the AO

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