**Case Study 4** Rohan Ltd., Kolkata Rohan Ltd., Kolkata, an associated enterprise of Glamour Inc. of USA, is engaged in manufacturing activities besides software development. The following aspects/information are made available to you: (i) **Software development:** During the financial year 2022-23, Glamour Inc. bid a contract for USD 500 million for software development meant for use in medical treatment. Rohan Ltd., Glamour Inc. and yet another group company were involved in developing the software contributing 40%, 30% and 30% respectively. The cost incurred by Rohan Ltd. was USD 50 million. The total profit earned by Glamour Inc. was USD 150 million. Glamour Inc. shared revenue of USD 100 million to its Indian subsidiary Rohan Ltd. (ii) **Royalty due to Mike Ltd.:** Rohan Ltd. entered into an agreement in April, 2022 with Mike Ltd. of UK for use of technology owned by Mike Ltd. to develop software, being the patented product of Mike Ltd. The agreement was a regular agreement with neither the approval thereof from the Central Government, nor being covered in the Industrial Policy of the Central Government. As per the agreement, Rohan Ltd. had to pay ₹55 lakhs as royalty to Mike Ltd. for the year ended 31st March, 2023. The DTAA between India and UK provides for withholding tax@ 15%. (iii) **Liability to additional income-tax:** For the assessment year 2021-22, an addition of ₹205 lakhs due to ALP adjustment, was determined in the assessment of Rohan Ltd., which was completed on 31st December, 2022. The assessee had filed the ITR of assessment year 2021-22 in March, 2022 under section 139(4) and had decided to accept the addition to the ALP made by the Assessing Officer vide order dated 31st December, 2022. The additional income-tax and interest was paid on 10th April, 2023. All the transactions of Rohan Ltd. were denominated in US dollars. The rate of interest applicable is @ 6-month LIBOR as on 30th September 2022 may be taken as 6%. (iv) **Remittance of tax for own sources and seeking refund:** In March, 2023, Rohan Ltd. had to pay ₹25 lakhs to McDermott Ltd. of Country N for availing certain services. As per agreement between the parties, tax deductible on such income under section 195 had to be borne by Rohan Ltd. The said services were rendered by McDermott Ltd. online and no personnel came to India for rendering the said service. Rohan Ltd. remitted on 31st March, 2023, the tax deductible under section 195. The DTAA between India and Country N provided for no tax in respect of such transaction. Rohan Ltd. now wants to invoke relevant provisions of the Income-tax Act, 1961 to seek refund of tax so remitted by it previously. (v) **Tax consequence of one of the directors:** Chatterjee (aged 65) is one of the directors of Rohan Ltd., whose residential status for the assessment year 2023-24 is non-resident. He received ₹3 lakhs being component of rental income distributed by a REIT in which he is a unit holder. He received ₹2 lakhs by way of dividend component distributed by the REIT and the company whose income was so distributed by the REIT had exercised option under section 115BAA. Chatterjee has to pay income-tax both on the aforesaid rental income and dividend income components in the country of which he is presently a resident, under appropriate heads of income there. (vi) **Payment of fee for technical services:** Rohan Ltd. had imported some machines from Blue Moon Ltd. of Country A. Since the machines did not operate at 100% efficiency, Rohan Ltd. solicited the services of the supplier who deputed its engineers to Rohan Ltd. The engineers came on 2nd June, 2022 and returned on 13th June, 2022. Again, the engineers came on 4th October, 2022 and returned on 28th March, 2023. It paid ₹50 lakhs to Blue Moon Ltd. on 28.3.2023 net of the withholding tax, as per the provisions of Income-tax Act, 1961. The agreement for getting technical services and fee payable thereon is covered by approval from the Central Government. (vii) **David & Co LLP, Singapore:** David & Co LLP in Singapore is a non-resident entity in which Rohan Ltd. has 30% profit sharing rights. David & Co LLP is an e-commerce operator who sold goods of Rohan Ltd. The receipts of David & Co LLP for the financial year 2022-23 consisted of (i) ₹180 lakhs received for sale of goods from persons resident in India; and (ii) ₹66 lakhs received for sale of goods from persons who are not residents of India but residents in Europe. The said sum of ₹66 lakhs included receipt of ₹40 lakhs from persons who used internet protocol address located in India.