INSTRUMENTARIUM CORPORATION Vs. STATE

JUDGEMENT

(1.) 1. M/s Datex-Ohmeda (India) (P) Ltd. (for short the 'Datex') is an Indian company and is a tax resident of India. It is a wholly-owned subsidiary company of M/s Instrumentarium Corporation, Finland, a non-resident company, a tax resident of Finland (for short 'Instrumentarium') which has not been assessed under the IT Act, 1961 (for short the "Act"), in India. Instrumentarium is engaged in the business, inter alia, of manufacturing and selling of medical equipments. Datex operates as 'distributor' of the Instrumentarium in Indian market. On 26th Aug., 2002, Instrumentarium and Datex entered into a loan agreement under which Instrumentarium granted a loan in US dollar equivalent to Indian Rs. 360 million for the purpose of general business of Datex. The loan is said to be free of interest. Datex has filed copies of the loan agreement with the RBI to comply its requirement. The Convention between the Republic of India and the Republic of Finland for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital was concluded on 10th June, 1983, notified on 20th Nov., 1984, and subsequently amended by notification dt. 13th Aug., 1998, (referred to in this ruling as the "Treaty"). Instrumentarium filed this application under Section 245Q(1) of the Act seeking advance ruling of the Authority on the following questions :

(2.) On 22nd April, 2004, the Authority permitted the applicant to urge the following two additional questions :

(3.) AT the outset we may note that the aforementioned questions are more in the nature of paraphrases of questions rather than questions postulated in Section 245Q(1) of the Act. However, question No. 2 is not pressed and question No. 3 is reframed to read as under: