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January 2023

Article 5 of India-Singapore DTAA; Section 9(1) of the IT Act – (i) Since the Indian parent company of Singapore subsidiary (Sing Sub) carried on all material activities, and since the Singapore subsidiary was merely shipping goods to Indian customers, fixed place PE of Sing Sub was constituted as what is relevant to be seen is the scope of activities carried out; (ii) on facts, dependent agent PE was constituted; (iii) the AO was directed to compute profit and attribute the same to PE as per directions given and various decisions on the issue.

By Geeta Jani | Dhishat B. Mehta | Bhaumik Goda
Chartered Accountants
Reading Time 10 mins
Redington Distribution Pte. Ltd. vs. The DCIT
TS-908-ITAT-2022-Chny
ITA No: 14/Chny/2020
A.Y..: 2011-12
Date of order: 16th November, 2022

Article 5 of India-Singapore DTAA; Section 9(1) of the IT Act – (i) Since the Indian parent company of Singapore subsidiary (Sing Sub) carried on all material activities, and since the Singapore subsidiary was merely shipping goods to Indian customers, fixed place PE of Sing Sub was constituted as what is relevant to be seen is the scope of activities carried out; (ii) on facts, dependent agent PE was constituted; (iii) the AO was directed to compute profit and attribute the same to PE as per directions given and various decisions on the issue.

FACTS

Sing Sub, a Singapore entity is a tax resident of Singapore. It is a subsidiary of I Co, a listed Indian company and a leading supply chain solutions provider worldwide. Sing Sub was also engaged in the same business.

In the course of survey conducted at the premises of I Co, the tax authority found certain evidences, such as, emails, correspondence between I Co and Sing Sub, documents, etc. It also recorded statements of certain employees of I Co who were providing certain services to Sing Sub. In the process, it identified employees involved in sales function, who comprised a team called ‘Dollar Business’. It was found that ‘Dollar Business’ pertained to the USD business of Indian customers. Factually, the ‘Dolla
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