By Geeta Jani | Dhishat B. Mehta | Bhaumik Goda
Chartered Accountants
5 DCIT vs. Credit Suisse (Singapore) Ltd [[2022] 139 taxmann.com 145 (Mumbai - Trib.)] ITA No: 6098/7262/Mum/2019 A.Ys.: 2013-14 to 2015-16; Date of order: 6th June, 2022
Section 9(1)(i) of the Act – Commission received for overseas distribution of Indian mutual fund was not taxable in India
FACTSAssessee, a tax resident of Singapore, was a SEBI registered FII. It entered into an offshore distribution agreement with H, an Indian company, to distribute mutual fund schemes. Assessee created awareness about the schemes of funds, identified investors and procured subscriptions. As consideration, H paid commission which was received by assessee outside India. AO noted that the mutual fund of H was controlled and regulated by SEBI and RBI in India. Therefore, its location control and management were situated in India. This constituted a business connection with India and resulted in offshore distribution income having nexus with India. Accordingly, AO taxed commission in India.
On appeal, CIT(A) held that offshore distribution income earned by the assessee was in the nature of business income. In the absence of permanent establishment, income was not taxable in accordance with Article 7 of India – Singapore DTAA.
Being aggrieved, revenue appealed to ITAT.
HELD• As per Explanation 1(a) to section 9(1)(i) of the Act, only that portion of the income which is ‹reasonably attributable› to the operat
