The Delhi High Court said that payments to overseas units are not automatically taxed in India | Today’s news

The court also rejected the idea that India could tax income simply because it was not taxed in another jurisdiction. “The right to tax is not the right to exclude, but the right to enforce,” he said, adding that the power to tax must come from law.

“The court rightly held that merely because the US authorities had not taken any action, India could not step into the void and claim that the transactions were taxable,” said Pallav Pradyumn Narang, partner at tax firm CNK. The tax department “must build on the accrual and business nexus, not just the payer location,” he added.