Dr Sunil Moti Lala – [2026] 188 taxmann.com 37 (Article)
1. Introduction
The International Tax Roundup for June 2026 is a comprehensive digest of critical judicial developments in international tax law. This edition covers 38 significant tax treaty decisions, providing readers with essential insights into the evolving landscape of cross-border taxation. The digest is structured to address complex legal controversies on Permanent Establishment (PE), Business Profits, Shipping and Air Transport, Dividends, Interest, Royalty, Fees for Technical Services/Fees for Included Services (FTS/FIS), Capital Gains, Foreign Tax Credit (FTC) issues. This edition covers the judicial precedents dealing with:
a) PE — Fixed Place PE/DAPE; Fixed Place PE/DAPE/Service PE; Fixed Place PE/Supervisory PE/Installation PE (3 cases) [see Para II]
b) Business Profits — Offshore supply not taxable in India; revenue attribution to PE must reflect actual functions performed; ad-hoc attribution to Indian PE not sustainable (3 cases) [see Para III]
c) Shipping and Air Transport — Feeder vessel/slot arrangement receipts covered under Article 8 (1 case) [see Para IV]
d) Dividends — Refund of DDT in excess of DTAA rate (1 case) [see Para V]
e) Interest — Broken-period interest paid by buyer of NCD taxable as IFOS; decretal amount interest not liable for TDS (2 cases) [see Para VI]
f) Royalty — Software; refunded royalty; market data charges to access databases (5 cases) [see Para VII]
g) FTS/FIS — Logistics services; advisory and consultancy services; software support services; credit rating and surveillance services; management/business support services and cost contribution agreements; commission; reimbursement of seconded employees’ salary; helicopter repair and overhauling; airline passenger services; commission for services rendered outside India (14 cases) [see Para VIII]
h) Capital Gains — Business commitment furnished by assessee’s affiliate does not alter character of capital gains in hands of Mauritian entity (1 case) [see Para IX]
i) FTC — Delay in filing Form 67; credit accepted by AO but omitted in final tax computation (4 cases) [see Para X]
j) Others — Equalisation Levy; unsubstantiated reimbursements without section 195(2) approval attract TDS; draft assessment order accompanied by demand notices quashed; no penalty where addition based on interpretation and application of law qua characterisation of income (4 cases) [see Para XI]
2. Permanent establishment
2.1 Fixed Place PE/DAPE
a) SLP dismissed: reopening notice alleging DAPE/fixed place PE quashed as AO’s recorded reasons disclosed no tangible material for belief that PE existed.
ACIT vs. G.E. POWER SP Z.O.O [2026] 187 taxmann.com 45 (SC) [26-05-2026] – SLP (CIVIL) Diary No. 22398 of 2026 – [AY 2013-14 to 2017-18]
Assessee, a US company was engaged in business of manufacturing, sales, marketing of power generation equipment and technical support services. A survey u/ s. 133A was conducted upon the assessee’s sister concern in India, namely, ‘GPIL’. On the basis of the same, AO noted that the assessee had a PE in India in the form of a DAPE and a Fixed Place PE. He also noted that post survey operations, it was found that the assessee had made certain supplies to Indian entities; however, no tax was deducted on payments made by the Indian entity for said supplies. On the basis of the same, a reopening notice was issued against the assessee. High Court noted that a plain reading of the reasons as recorded by the AO clearly indicated that there was no tangible material for forming a belief that the assessee had a dependent PE or a Fixed Place PE in India during the relevant assessment years. High Court held that, on the facts, the reopening notice issued against the assessee was unjustified and the same was set aside. Since no case for interference was made with the impugned order of the High Court, the SLP was dismissed [SLP dismissed against Ge Steam Power Systems v. ACIT [2026] 185 taxmann.com 914 (Delhi)]
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