The Income Tax Appellate Tribunal (ITAT), Mumbai held that the payment made by Volkswagen (Indian Company) to a Foreign Celebrity for appearance outside India is taxable.
In the case of Volkswagen Finance Pvt Ltd. vs. Income Tax Officer, the tribunal observed that the income embedded in payment to the international celebrity i.e. Nicholas Cage, for participation in Dubai A8L launch event for promoting the business of the assessee in India, is taxable as arising from a ‘business connection’ and also under Article 23(1) of India-US tax treaty, was taxable in India.
The petitioner namely Volkswagen Finance Pvt Ltd. is an Indian Company. The assessee had made a payment of US $ 4,40,000, to a foreign celebrity appearance at Dubai, and the assessee did not withhold any tax from the said remittance. The Assessing Officer (TDS) found that an entity by the name of Audi India, a division of Volkswagen Group Sales India Ltd., and the assessee jointly planned an event in Dubai for the Dubai Audi A8L launch event.
The Indian company contended that on the ground that the event took place in Dubai, UAE, and the celebrity made his appearance at the event in Dubai, it was claimed that this event did not rise to any tax implications in India so far as the event and the celebrity appearance was concerned.
The issue raised in this case was whether the Volkswagen (Indian Company) to a Foreign Celebrity for appearance outside India is taxable or not?
The Income Tax Appellate Tribunal (ITAT) consisting of the Judicial Member, Amarjit Singh and the Vice President, Promod Kumar held that the income embedded in payment to the international celebrity, for participation in Dubai A8L launch event, was taxable in India.
The tribunal in the light of this observation upheld the orders passed by the Income Tax Authority.
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