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eBay Inc’s Profits Not Taxable In India: Mumbai Income Tax Appellate Tribunal

The Mumbai Income Tax Appellate Tribunal has ruled that eBay Inc does not need to pay any income tax on the profits earned from its Indian subsidiaries, reports The Hindu Business Line. According to a copy of the court ruling available on Indian Kanoon, eBay AG which was incorporated and is a tax resident of Switzerland, had entered into a marketing support agreement with its group companies eBay India and eBay Motors India to avail certain support services with respect to its India specific websites. eBay AG had earned Rs 4.94 crore (Rs 4,94,27,530) from the operations of these subsidiaries in the country. The company had claimed that this revenue was taxable as business profits in India, only if eBay AG had a permanent establishment in India, as per the double taxation avoidance agreement between India and Switzerland. Since the company doesn't have a permanent establishment in India yet, eBay claimed that the amount was not taxable. During the assessment of the proceedings, the Assessment officer stated that the entire revenue earned by eBay India and eBay Motors India was through services rendered to eBay AG and both the subsidiaries were also found to be collecting the revenue for eBay AG from its Indian operations, due to which, the officer noted that the income received by eBay AG was in the form of 'Fee for technical services' and had taxed the company at 20% due to this reason. While CIT (A) (Commissioner Appeals) stated that the assessing officer was not justified in terming the amount as 'Fees…

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