Nike breathes air - relief for MNC arms

DIRECT TAX

Rejecting appeals filed by the Revenue department, the Tribunal on facts held that the activities of Nike's Indian representative offices were restricted to purchase of goods for exports and that would not constitute a permanent establishment under Article 5 of India-US tax treaty.

Lately, the Indian Revenue has upped its surveillance on activities of MNC representative offices, in general. The Revenue alleges that representative office activities result in revenue generation.

 

Hence, a portion of revenues earned by head quarters is liable to tax under the domestic