India

India

November 12, 2008

INDIA cannot tax a company that provides offshore supplies and services tied to a turnkey project in India, the Income Tax Appellate Tribunal said in August. 

A Korean company agreed to install an onshore fiber optic system for the Power Grid Corporation of India. It also agreed separately to provide certain supplies and services offshore.The contract for the offshore supplies and services was signed in India, but the company had no office on the ground involved in performing the contract or arranging the sale.The tribunal said that since the  “delivery of the goods, documents and [a] substantial part of the sale consideration took place outside of India,” the income was not subject to tax in India.The case is LG Cable Limited.