'The foreign companies contend that no income should be attributed to the buying operations in India'

Liaison collision in the tax office

Just Do It! That's what Nike was told if you were to interpret the recent ruling by the Bangalore Income-Tax Appellate Tribunal (ITAT). The Tribunal reasoned that the US-headquartered Nike Inc. was purchasing goods by using the services of its liaison office.
So, the office was only rendering services for the `purpose' of exporting goods. Such an activity does not create any taxable presence because of an exclusion provide for in the Indian laws.

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