PLACE OF EFFECTIVE MANAGEMENT-(POEM) INCOME TAX

Place of effective management-(POEM) INCOME TAX

POEM means in the direct taxation “a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are in substance made".

CIRCULAR 6/2017 dated 24-01-2017:- In this circular 6/2017 the process of determining the POEM of the companies would be primarily based on the fact, the company is engaged in ABOI or not.

 If the company is engaged in ABOI then the POEM should be determined as:-

• Majority meetings of the BOD’s of the company are held in INDIA, Then POEM in OUTSIDE INDIA.

• BOD’s of the company are standing aside and not exercising the power of the management and powers are being exercised by either the holding company or other person’s resident in INDIA, then POEM in INDIA.   

If the company is not engaged in ABOI then the POEM should be determined as:

•  A place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole INDIA then the POEM IS IN INDIA.

•  Place where the decisions being made than the place is in INDIA then the POEM IS IN INDIA.

POEM

*PASSIVE INCOME OF THE COMPANY SHALL BE AGGREGATE OF: - INCOME FROM THE TRANSACTIONS WHERE BOTH THE PURCHASE OR SALE OF GOODS IS FROM ASSOCIATED ENTERPRISES, AND INCOME BYWAYS OF ROYALTY, DIVIDEND, INTEREST OR RENTAL INCOME.

CIRCULAR 25/2017 dated 23-10-2017:- In this circular to clarified related to guidelines for establishing POEM in INDIA, CIRCULAR 6/2017- Determined of POEM were issued 24^th January 2017, and CIRCULAR NO. 8/2017 dated 23^rd February 2017 it has clarified that the POEM Provisions shall not apply to a company having T/O or GROSS RECEIPT OF 50 CRORE OR LESS IN AN F/Y.

it’s simply that if the company having a business is engaged in  India the poem in India otherwise outside India in a similar case in holding and subsidiary company, if one of the holding company its structure and field working its payroll functions, accounting, human resources functions, etc.. and its same function it's subsidiary the company then not to say that its subsidiary company it's standing aside not any power excersing them if the place where decisions are made or where the meeting are held, then the poem is situated in that place.

https://eknowledgeachiever.blogspot.com/2020/08/Income-tax-act-sec-48.html

Income Tax Act First Proviso to Section 48 and Rule 115A 

IF YOU SEE THIS ABOVE SECTION 48 THEN CLINK THE ABOVE LINK.

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