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Situs of intangible assets are to be determined on the basis of situs of the owner

Global Tax Update:September 2016/India

The Indian Court has held that in the absence of any specific provision in Indian domestic tax law for location of an intellectual property (IP) such as trademarks, brands, logos etc., situs of IP is to be determined on basis of situs of the owner of such IP. Further, Court held that offshore IP transfer is not taxable in India in the absence of any specific provision.(Global Tax Update:September 2016/India)

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1. Situs of intangible assets are to be determined on the basis of situs of the owner

The Indian Court has held that in the absence of any specific provision in Indian domestic tax law for location of an intellectual property (IP) such as trademarks, brands, logos etc., situs of IP is to be determined on basis of situs of the owner of such IP. Further, Court held that offshore IP transfer is not taxable in India in the absence of any specific provision.

2. In absence of evidence, royalty income could not be said to be effectively connected with PE

Tribunal refused assuming facts and overlooking taxpayer’s submissions and held that in absence of inquiry and substantive material produced with regard to the nature of services performed, it is not possible to presume that income from such services is effectively connected to taxpayer’s PE (Permanent Establishment). Hence, income earned by taxpayer under TCL was held to be taxable at 10% on gross basis as royalty under the tax treaty and not as business income taxable at 40% on net basis.

 

>> Click for Japanese [無形資産の所在地:所有者の所在地で判定 ほか]

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