The Income Tax Appellate Tribunal’s Delhi Bench ‘D’, presided over by Sh. N.K. Billaiya, Accountant Member, and Sh. Anubhav Sharma, Judicial Member, dealt with the appeal filed by UK Grid Solution Ltd against the Deputy Commissioner of Income Tax, Circle-3(1)(1), International Taxation, New Delhi. The dispute pertains to the final assessment order for the assessment year 2018-2019.
UK Grid Solution Ltd, a company incorporated in the United Kingdom, is engaged in the business of designing, engineering, manufacturing, and supplying electrical equipment for power transmission and distribution. The company faced a dispute over income earned from various contracts in India, which were believed to have been taxed inappropriately by Indian tax authorities.
The primary issue was whether the income from offshore supplies provided to Indian customers was taxable in India. The tribunal examined the nature of the contracts and the company’s business operations in detail. It was determined that the contracts were incorrectly assessed by the tax authorities as a single composite contract instead of being treated as separate contracts. Consequently, the tribunal found that the profits attributed to the permanent establishment in India were incorrectly calculated.
The tribunal’s decision to overturn the tax authorities’ assessments for UK Grid Solution Ltd underscores the importance of correctly assessing international contracts and operations within the framework of international tax laws and agreements. This case highlights the complexities of tax issues faced by multinational companies operating across borders, and the need for clarity in the application of tax laws and treaties.
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