The Mumbai Income Tax Appellate Tribunal has recently ruled on a case concerning reimbursement payments by an Indian branch to its parent, a Belgian banking company. During the tax year at issue, the Belgian company charged its Indian branch for costs attributable to the branch that were incurred for the use of data processing software hosted in Belgium. There was no markup on the costs incurred and the Indian branch did not withhold any tax from the payments.
Audit
During the tax audit, the …