income from offshore services isn’t taxable

www.carajput.com;Service Tax

Income From Offshore Services Isn’t Taxable If It Is Provided Outside India Without Any Connection With Pe In India

 IHI Corporation v. ADIT [Mumbai ITAT] ITA No. 7267 of 2012

Date of Decision: April 17, 2015

Facts of the case

The assessee, a Japanese company, was a manufacturer of heavy machinery, providing technology oriented products and services to industrial, private and public sectors. It had been awarded Engineering, Procurement, Construction and Commissioning contracts by Petronet LNG Ltd. in India.

The assessee offered the income received from onshore activities to tax in India with the claim of applicability of India Japan tax treaty but had not offered income from offshore supply and offshore services to tax in India on the ground that income from offshore supply was not received in India, as its actual place of business was outside India and, hence, it had neither accrued or arisen in India.

The decision of the Tribunal

The Appellate Tribunal held that the income from identical services rendered by the assessee in respect of the contract under consideration cannot be characterized differently.

The income from offshore services, though chargeable under section 9(1)(vii) but exempt under the DTAA, cannot be charged to tax in the light of section 90(2). It was further held that the provisions of section 90(2) is very clear that where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: singh@carajput.com  or call at 9555555480

Read our articles:

Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.

Recent Posts

Loan Against Shares Interest Rates Explained: Investors Know

Loan Against Shares Interest Rates Explained: What Investors Should Know In India’s dynamic financial market, investors often look for flexible… Read More

6 days ago

Why and How to Avoid Useless Expenses this Diwali

Why and How to Avoid Useless Expenses This Diwali – A Nature Lover’s Perspective  October 2025 Diwali, the festival of… Read More

6 days ago

How to manage repayment effectively personal loan of 3 lakhs

How to manage repayments effectively on a personal loan of three lakhs Taking a Rs. 3 lakh personal loan can… Read More

1 week ago

Procedure of Member’s Voluntary Winding Up under Co Act 1956

Procedure of Member’s Voluntary Winding Up under the Companies Act, 1956 A Members’ Voluntary Winding Up is a mode of… Read More

1 week ago

Financial Transactions That Can Trigger Income Tax Scrutiny

Top 10 Financial Transactions That Can Trigger Income Tax Scrutiny : The Income Tax Department keeps a close watch on… Read More

2 weeks ago

Overview of the Internal Audit Iceberg Concept

Overview of the Internal Audit Iceberg Concept Apache Iceberg introduces a powerful feature called Integrated Audits, which allows organizations to… Read More

2 weeks ago
Call Us Enquire Now