Circular No. 8/2017

Clarification for determination of Place of Effective Management (POEM) of a company, other than an Indian company

What this is

Circular No. 8/2017 was issued by the Central Board of Direct Taxes on 23 February 2017. Its subject is Clarification for determination of Place of Effective Management (POEM) of a company, other than an Indian company.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

The instrument itself

The text, read by machine from the scan

This is not the department’s typed text. The department published this one as a scanned image of a signed paper, so there is no text in the file to copy. What follows was read off that image by optical character recognition and is reproduced without correction — the mistakes you can see are the machine’s, and there may be others you cannot. It is here so the document can be found and read; it is not a substitute for the file, which is linked below. Do not quote from this page.

Circular No 08 of 2017
F, No. 142/11/2015-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
KKK
Dated 23° February, 2017
Subject: Clarification for determination of Place of Effective Management (POEM) of a company, other than an Indian company-reg.

The concept of POEM for deciding the residential status of a company, other than an Indian company, was introduced by the Finance Act, 2015. The existing provision of
Clause (ii) of sub section (3) of section 6 of the Income-tax Act, 1961 (the Act) shall come into effect from Ist April, 2017 and accordingly, applies to Assessment Year 2017-
18 and subsequent years. Guiding Principles for determining POEM of a company were issued by Circular No. 6 of 2017 on 24'h January, 2017. Press Release on POEM guidelines dated 24! January, 2017 has, inter alia, stated that the POEM guidelines shall not apply to a company having turnover or gross receipts of Rs. 50 crores or less in a financial year.

2. In view of above, it is clarified that existing provision of clause (ii) of sub section (3)
of section 6 of the Act, shall not apply to a company having turnover or gross receipts of Rs. 50 crores or less in a financial year.
e ae a.
Lea —saf|2 F
(Rajesh Kumar Kedia)
. Director (Tax Policy & Legislation)
Copy to:-
1. The Chairman, Members and officers of the CBDT of the rank of Under Secretary and above
2. PS to the Revenue Secretary
3. “All Pr. Chief Commissioners of Income-tax & All Directors General of Income-tax with a request to bring to attention of all officers in their regions/ charges
4. Pr. Director General of Income Tax, NADT, Nagpur ‘
S. Pr. DGIT (Systems)/ Pr. DGIT (Vigilance)/ Pr. DGIT (Admn)/ Pr. DGIT (L&R)/
6. ADG (PR, Pi& OL), Mayur Bhawan, New Delhi for printing in the quarterly tax bulletin and for circulation as per usual mailing list (100 copies)
7. C&AG, New Delhi
8. Web Manager for uploading on www.incometaxindia.gov.in & placing in public domain
9. Data Base Cell for uploading on www. irsofficersonline.gov.in
10. Guard File
Director (Tax Policy & Legislation)

Source: the department’s scanned file.

← Circular No. 9/2017 · Circular No. 7/2017 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.