Marvel Ltd, Mumbai Marvel Ltd, Mumbai is engaged in manufacture of mobile phones in India. It borrowed INR 100 crores on 1st July, 2022 from Reid Inc. of USA for which interest is payable @ 6% per annum. Mike Inc. of USA who holds 30% shareholding in Marvel Ltd. guaranteed the loan given by Reid Inc. to Marvel Ltd. For securing the guarantee, Mike Inc. deposited INR 100 crores with Reid Inc. The net profit of Marvel Ltd was INR 4 crores as per Statement of Profit and Loss for the year ended 31st March, 2023. Marvel Ltd has claimed interest on loan, depreciation of INR 3 crores (which includes additional depreciation of INR 85 lakhs) and provision for income-tax of INR 1 crore. It also claimed guarantee fee paid to Mike Inc. @ 2% of the loan and whereas in the case of unrelated parties, it was found that the guarantee fee payable is 1% of the loan. Kevin Ltd of Country S Kevin Ltd of Country S is an associated enterprise of Mike Inc. of USA. Kevin Ltd has a branch in India since 2010. It was selling the goods to Indian customers by importing from various countries besides sale in India of goods manufactured by it in Country S. A survey under section 133A of the Act was conducted in its branch premises in January, 2022 and undisclosed assets of INR 90 lakhs were found. Assessment for the assessment year 2022-23 was completed by making addition of the entire undisclosed asset of INR 90 lakhs. The assessee preferred appeal before CIT (Appeals) who gave complete relief to the assessee. The Income-tax Department wants to file an appeal before ITAT. The adjusted total income of the Indian branch of Kevin Ltd for the year ended 31st March, 2023 is INR 80 lakhs. The branch incurred INR 12 lakhs by way of executive and general administrative expenditure during the financial year 2022-23. The head office has allocated INR 18 lakhs as the branch's share of head office expenditure including the expenditure of INR 12 lakhs incurred by the branch. Gayle, Director of Kevin Ltd Gayle (age 58) one of the directors of Kevin Ltd is a citizen of Country S. He joined the Indian branch of Kevin Ltd on 1stJuly, 2018 after remaining in Country S since his birth. He has been in India since he joined the branch of Kevin Ltd. He reports the following transactions for the financial year 2022-23: (a) Interest on securities held in Country S fetching interest annually. Credited USD 1,000 to his bank account in India on 31st July, 2022. Interest is due on 30th June, 2022. There is no DTAA between India and Country S. (b) He has rubber estate in Country M. Agricultural income from rubber estate USD 5,000 representing total sale proceeds of rubber less cultivation expenses remitted by his rubber estate manager on 26th March, 2023. It is to be treated as business income of Gayle. There is a DTAA between India and Country M and as per DTAA the said income is taxable in both the countries and the resident Country would give tax credit. The relevant Article in DTAA is similar to that of rule 128 of the Income-tax Rules, 1962. (c) Has let out a property in Country K from which he gets monthly rental income of USD 1,000 credited to his bank account in India in the first week of every subsequent calendar month. There is no DTAA between India and Country K. (d) Invested in equity shares of a listed company in Country K who declared dividend on 23rd January, 2023 but it was not received till 31st March, 2023. The amount of dividend is USD 500 (gross). (e) During the financial year 2022-23, Gayle went on deputation to Country A for 3 months (i.e from 1st May to 31 July,2022) and was paid USD 10,000 per month as salary by the branch in Country A. This amount was credited to his bank account in India. As per the employment agreement the salary is due on the first day of the succeeding calendar month. There is a DTAA between India and Country A and as per DTAA the salary income is taxable in both the countries with no tax credit thereof. Trio (P) Ltd, Jaipur a wholly owned subsidiary of Marvel Ltd Trio (P) Ltd, Jaipur is a wholly owned subsidiary of Marvel Ltd. It paid INR 60 lakhs to Jones Inc. of USA as fee for technical services. Services were rendered by the employees of the branch of Jones Inc. in Mumbai. There is DTAA between India and USA which provides for tax withholding @ 10% in respect of fee for technical services. Trio (P) Ltd invested in MM (P) Ltd of country X and received dividend of ₹600 lakhs during the financial year 2022-23. It declared and distributed interim dividend of INR 200 lakhs in October, 2022 and a final dividend of INR 300 lakhs in October, 2023. Trio (P) Ltd availed online digital advertisement service provided by Marshall Inc. of USA. It paid INR 10 lakhs and the amount outstanding as on 31st March, 2023 was INR 2 lakhs for the said online digital advertisement service. Marshall Inc. is also an e-commerce operator who sold its goods to customers resident in India for INR 180 lakhs during the financial year 2022-23. Also, during the same year, Marshall Inc. sold goods for INR 70 lakhs to customers outside India but has used IP address in India for the purchase of those goods. Additional information: (a) Maria (age 55) wife of Gayle a foreign citizen came to India and remained with Gayle since July, 2018. She has total income in India of INR 11 lakhs and income of INR 3 lakhs in Country S for the financial year 2022-23. (b) Consider SBI Telegraphic Transfer Bank Rate (TTBR) conversion rate as follows: DateEx Rate in INR FOR 1 USD 30.4.202278 31.5.202279 30.6.202280 31.7.202276 31.8.202280 30.9.202277 31.10.202279 30.11.202280 31.12.202281 31.1.2023 to 31.3.202382 (c) Reference to the Act would mean the Income-tax Act, 1961. (d) Reference to the Rule would mean the Income-tax Rules, 1962. Required: Choose the most appropriate alternative for the following MCQs: