The Authority for Advance Rulings (the
"Authority") has recently in VNU
International B.V. v. Director of Income-tax (International
Taxation), Mumbai
1 opined on an important practical issue faced by foreign
investors in India, namely, whether a tax return needs to be filed
in India even where no tax is payable in India on account of the
beneficial provisions of a tax treaty. The Authority in VNU
International answered the question in the affirmative and
held that a tax return is required to be mandatorily filed even in
cases where no tax is liable to be paid in India.
Relevant Legal Provisions
The relevant provisions of the domestic tax law i.e. Income Tax
Act, 1961 ("Act") cast a duty on every
person including a foreign company to furnish a return of income
with respect to their income (in case of a foreign company its
India sourced income) earned in a financial year in the prescribed
form, duly verified in the prescribed manner. However, the Act
provides for
