IN RE: BRITISH GAS INDIA P. LTD. Vs. STATE

JUDGEMENT

(1.) THE present application has been filed under Section 245Q of the Income -tax Act 1961 (for short "the Act"), by the British Gas India Private Limited, Gurgaon (for short "the applicant"), a company which is registered in India under the Companies Act, 1956. Though the applicant itself is a resident in India within the meaning of Section 6 of the Act, it has raised certain issues relating to the tax liability of some of its non -resident employees lent to group companies abroad. The applicant has sought advance ruling of this Authority on the following questions:

(2.) THE applicant has stated that it is a part of the BG group, a leading international energy company which deals in all kinds of natural gases. India is one of BG group's six core geographic areas of operation. The applicant is responsible for managing and developing upstream and downstream interests of the group in this country. The applicant has lent some of its employees to BG group entities outside India. These employees temporarily work at overseas locations with BG group companies. Mr. Nipun Pradhan and Mr. Manish Gupta are two such employees of the applicant, who are at present working in the United Kingdom (U. K.).

(3.) ACCORDING to the Commissioner, so far as Mr. Manish Gupta is concerned, he spent a total number of 88 days in India during the financial year 2005 -06. But prior to that in all other previous years, he was present in India for all the 365 days. As such, he would be regarded as a resident in India in view of the provisions of Explanation (b) to Sub -section (1) of Section 6 of the Act. Mr. Manish Gupta would also be liable to pay tax in India under Section fsof the Act as he has received salary in India for the whole financial year 2005 -06. His assignment letter dated May 25, 2005, also contains a clause similar to that of Mr. Nipun Pradhan indicated above in this paragraph. This would also make him liable to pay tax in India. As he was a resident in India during the financial year 2005 -06, the provisions contained in Article 16(1) of the Double Taxation Avoidance Agreement (DTAA) with the U.K. would not be attracted in this case.