Decision that income received from transfer of personnel and database taxable as "business profits"

The Indian Income Tax Appellate Tribunal (ITAT) delivered a ruling dated 2 March 2006 (reported in January 2007) in the case of IBM India Ltd v. Commissioner of Income Tax (2007-TIOL-22-ITAT-BANG) on whether consideration received for transfer of skilled employees and customer databases were liable to income tax as normal business income.

(a) Facts. The Taxpayer (i.e. IBM India Ltd) entered into an agreement with IBM Global Services India Ltd. (IGSI) under whic…