Kothari Ltd., Mumbai, holds 51% of shares of Wilson Inc., a USA based company. Wilson Inc. provides business auxiliary services to Kothari Ltd. From…
CA Final · Indirect Tax Laws · MTP · November 2026
Kothari Ltd., Mumbai, holds 51% of shares of Wilson Inc., a USA based company. Wilson Inc. provides business auxiliary services to Kothari Ltd. From the following details, determine the time of supply of service provided by Wilson Inc: Agreed consideration US $1,00,000 Date on which services are provided by Wilson Inc. 16th June Date on which invoice is issued by Wilson Inc. 19th August Date of debit in the books of account of Kothari Ltd. 30th September Date on which payment is made by Kothari Ltd. 23rd December
Suggested Answer and Working Notes:
Since Kothari Ltd. holds 51% shares of Wilson Inc., Kothari Ltd. and Wilson Inc. are 'associated enterprises' as per section 92A of the Income-tax Act, 1961. As per second proviso to section 13(3), in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply is the earlier of the following two dates: Date of entry in the books of account of the recipient of supply [which is Kothari Ltd. in the present case] 30th September OR OR Date of payment [by Kothari Ltd. in the present case] 23rd December Thus, time of supply is 30th September.
Topics: Time of Supply
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