Megastar Ltd., Delhi Megastar Ltd. is a company with businesses across multiple sectors both in India and abroad. It wanted to expand its manufacturing capacity by importing machinery from its associated enterprise located outside India with offshore supply of spares and contract for installation in its premises. It apprehends some dispute because of some complexities in the terms of contract. It proposes to obtain an advance ruling in this regard. Megastar Ltd. recruited one mechanical engineer and one software specialist. The details are given below: NameRobertVishnu Place of residence before joining for employmentUKIndia Period of stay in India in preceding 4 years90 daysSince birth NationalityIndian OriginIndian citizen Date of joining (assume for counting period of stay)29.10.202101.11.2021 Place of postingNew DelhiCountry Z Salary income (computed)25,00,00025,00,000 Other income by way of rent outside India6,00,000Nil Tax payable in the place of postingAs per IT ActNo Income-tax Transfer Pricing disputes Megastar Ltd. has a subsidiary, Ministar SA, in Country J and there has been supply of finished goods by Megastar Ltd. to Ministar SA. Ministar SA has onward sold those goods as a sole distributor for certain countries including Country J. There is a DTAA between India and Country J. For the assessment year 2019-20, there are some disputes with regard to arm's length price of the supply of finished goods and the TPO had proposed an upward adjustment to the revenue earned from Ministar SA. The company has contested the order and currently an appeal against the order is pending before the ITAT. For the immediately preceding assessment year (i.e., A.Y.2018-19), the Income-tax officer passing an order in conformity with the order of the TPO had made an upward adjustment to the price of the goods sold to Ministar SA by adopting a different method of determining arm's length price. Megastar had challenged the order before the ITAT (subsequent to being unsuccessful before the DRP). The ITAT heard the matter and disposed off the appeal by setting aside the order of the TPO directing them to consider afresh with full discretion. The remand proceedings are currently being undertaken by the TPO. Other transactions Megastar has a subsidiary in Country J. The DTAA between India and Country J provides for taxation of dividend @ 20% in respect of dividends received by shareholders of a company in Country J. The DTAA between India and Country K provides for concessional rate of tax@10% in respect of dividend. Megastar Ltd. entered into a contract with Mano Pte, Singapore for ₹ 5 crore in the financial year 2021-22. Mano Pte Ltd. designed and developed an online platform to facilitate online sale of goods worldwide by Megastar Ltd. The said payment was for the design and development services and also include fees for maintenance and support for one year after the installation of such a platform. There is no PE of Mano Pte Ltd. in India. The payment does not amount to Royalty under India-Singapore DTAA. Proceedings against Robert While conducting the background check for the employment of Robert, it was found that Robert was resident in India till the assessment year 2014-15, when he left for employment in June, 2015. He acquired a property in July 2017 out of unaccounted money kept in a bank account outside India. These amounts were accumulated when he was resident in India and were not disclosed for income-tax in India. Notice under section 10 of the Black Money Act, 2015 was issued in December, 2020. Choose the correct alternative for the following MCQs: (5 x 2 = 10 Marks) You are required to answer the following issues: