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India: Decision on Withholding Rule

(Apr. 5, 2010) On March 15, 2010, the Delhi High Court delivered a ruling on the issue of whether Indian companies that pay mobilization and demobilization costs to foreign parent companies must withhold a sum for taxes. The case, Van Oord ACZ India (P) Ltd. V. Commissioner of Income Tax, involved an Indian company that was entirely owned by a company based in the Netherlands. The ruling was that unless the proposed amount is taxable in India for the non-resident taxpayer, taxes do not need to be withheld. (Sanjay Sanghvi, Ruling on Tax Withholding on Costs Reimbursed to Non-Resident Parent, TAX NEWS SERVICE ONLINE, Apr. 1, 2010 (subscription database from the International Bureau of Fiscal Documentation).)