- (1.) SPECIAL LEAVE PETITION (C) No. 31543 of 2011: This is a petition under Article 136 of the Constitution of India seeking special leave to appeal against the order dated 08.08.2011 of the Authority for Advance Rulings (Income Tax) constituted under Chapter XIX-B of the Income Tax Act, 1961 (for short 'the Act') in A.A.R. No.862 of 2009.
(2.) The petitioner is a company incorporated in the United States of America (for short 'the USA') and is engaged in the business of designing, developing, marketing and distributing outdoor apparel. For making purchases for its business, the petitioner established a liaison office in Chennai with the permission of the Reserve Bank of India (for short 'the RBI') in 1995. The RBI granted the permission in its letter dated 01.03.1995 subject to the conditions stipulated therein. The permission letter dated 01.03.1995 of the RBI stated that the liaison office of the petitioner was for the purpose of undertaking purely liaison activities viz. to inspect the quality, to ensure shipments and to act as a communication channel between head office and parties in India and except such liaison work, the liaison office will not undertake any other activity of a trading, commercial or industrial nature nor shall it enter into any business contracts in its own name without the prior permission of the RBI. The petitioner also obtained permission on 19.06.2000 from the RBI for opening an additional liaison office in Bangalore on the same terms and conditions as mentioned in the letter dated 01.03.1995 of the RBI.
(3.) On 10.12.2009, the petitioner filed an application before the Authority for Advance Rulings (for short 'the Authority') on the questions relating to its transactions in its liaison office in India set out in Annexure-II to the application. Questions No. 1 to 6 as set out in Annexure-II to the application of the petitioner before the Authority are extracted hereinbelow: "1. Whether based on the nature of activities carried on by the Liaison Office ['India LO'] of the Applicant in India, as listed in the Statement of relevant facts [Annexure III], any income accrues or arises in India as per Section 5(2)9B) of the Act 2. Whether based on the nature of activities carried on by the India LO, as listed in the Statement of relevant facts [Annexure III], the Applicant can be said to have a business connection in India as per the provisions of Section 9(1)(i) of Act read with its Explanation 2 3. If the answer to Query 2 is in the affirmative, whether various activities carried out by the India LO, as listed in the Statement of relevant facts [Annexure III], are covered under the phrase 'through or from operations which are confined to the purchase of goods in India for the purpose of export' as stated in part (b) of Explanation 1 to Section 9(1)(i) of the Act 4. If the answer to Query 3 is in the negative, how would the profits attributable to the 'operations in India' be determined and what would be the broad principles to be borne in mind for attributing income to the India LO 5. Whether the India LO creates a permanent establishment ['PE'] for the Applicant in India under Article 5(1) of the Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains entered into between the Government of the Republic of India and the Government of the United States of America ['Treaty'] read with the PE exclusion available for purchase function in terms of paragraph 3(d) of Article 5 of the Treaty 6. If the answer to Query 5 is in the affirmative, how would the profits attributable to the PE in India be determined and what would be the broad principles to be borne in mind for attributing income to India LO under the Treaty ' ;