Earth Ltd. is located in India and holding 51% of shares of Sun Ltd. Sun Ltd. provides business auxiliary services to Earth Ltd. From the following details, determine the point of taxation of Earth Ltd : Agreed considera

As per section 92A of the Income Tax act, 1961, Earth Ltd. and Sun Ltd. are 'associated enterprises', as Earth Ltd. holds 51% shares of Sun Ltd. The question is silent about whether Sun Ltd. (service provider) is located in India or outside India. However it has been given that Earth Ltd. (service receiver) is situated in India and agreed consideration is in US $, thus it has been assumed that Sun Ltd. is situated outside India. Now, as per Rule 7 of the Point of Taxation Rules, 2011, in case of associated enterprises, where the person providing service is located outside India, the point of taxation is the earlier of the following two dates: Date of debit in the books of accounts of the service receiver; or Date of making the payment by the service receiver. Here, date of debit in the books of Earth Ltd. is 30th September, 2014; and Date on which payment was made by Earth Ltd. is 23rd December, 2014. Thus, the point of taxation will be 30th September, 2014 .