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Corporate Tax Alerts
Sharp insights
2021
2020
- Share application money constitutes capital asset
- Cashless exercise of stock options is subject to capital gains tax
- Loss on sale of depreciable assets is allowable business loss
- Legal fees paid to a partnership firm taxable as fees for technical service under India-Japan DTAA
- Reimbursement of hotel and travelling expenses to non-resident not subject to withholding tax
- Offshore supply taxable in India
- No disallowance where deduction for expenditure has not been claimed
- Non-voluntary gift of shares is liable to capital gains tax
- Consideration for live feed, live transmission is not royalty
- Amount received by partner on retirement from partnership firm is not taxable as capital gain
- Second set of clarifications issued in relation to Vivad se Vishwas Scheme
- Income from grant of distribution rights is not royalty
- Foreign exchange gain on redemption of shares at par is not taxable as capital gain
- Deduction denied for delay in filing the audit report
- Sovereign right to tax shipping income only by resident state upheld
- Expenditure on employee stock options is deductible
- Salary of non-resident employees recharged to project office for work performed outside India not taxable
- Withholding tax compliance by tenant cannot be sole reason for taxability of rent
- Mesne profits received for unauthorised occupation of immovable property is revenue receipt
- Securities premium utilised to set-off brought forward losses is not subject to tax on book profits
- Hypothetical income is not chargeable to tax
- Payment made by distributor for procuring software from non-resident, subject to withholding tax in India
- Bonus paid to employee-shareholder can be disallowed only in case of tax avoidance, evasion
- Exceptions to indirect transfer provisions introduced by Finance Act, 2015 are applicable retrospectively
- Expenditure of new product samples to be given to third party distributors, disallowed in hands of wholesale trader
- Company eligible to claim depreciation on revalued intangible assets acquired from erstwhile partnership firm
- Consumption based leave travel concession exemption to non-central government employees
- CBDT notifies Equalisation levy (Amendment) Rules, 2020
- Extension of due date for furnishing of income-tax return, audit reports
- CBDT notifies, amends timelines under Direct Tax Vivad se Vishwas Act, 2020
- Guidelines issued for intrusive, coercive action for recovery of taxes
- Income-tax authority prescribed for power of survey
- Government notifies financial product and financial service under International Financial Services Centres Authority Act, 2019
- Extension of due date for furnishing of income-tax return, audit reports
- Sale of copyrighted product / license is not royalty
- Appellate authority has jurisdiction to deal with additional grounds / claims
- Lease rent from let out buildings in Special Economic Zone qualifies for tax deduction
- Quality inspection and coordination services do not qualify as fees for technical services
- Dividend distribution tax cannot exceed the tax treaty rate
- Brought forward capital losses need not be set-off / adjusted against current year exempted capital gains under tax treaty
- Rules prescribed for claiming depreciation under concessional tax regime
- Substitution of new provision under tax treaty results in repeal and replacement of earlier provision
- Timeline extended for filing belated / revised return for assessment year 2019-20 and selection of certain cases for audit
- Guidelines issued in relation to tax deduction and collection provisions for e-commerce transactions
- Scrip-wise details to be provided only for capital gains eligible for grandfathering benefit
- Difference between fair value of immovable property and actual consideration, if less than 10% of actual consideration, is not taxable for buyer
- CBDT notifies Faceless Appeal Scheme, 2020
- Guidelines issued for compulsory selection of returns for audit, conduct
- Expansion of coverage of faceless proceedings under the income-tax law
- Government introduces ‘The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020’
- Foreign currency payments in cash in excess of specified limit disallowed
- Investment made prior to sale of original residential house eligible for exemption under section 54
- Business transferred against allotment of shares under approved scheme is not taxable as slump sale
- Reimbursement of secondees’ salary cost is not taxable as fees for included services / fees for technical services
- Business loss can be set-off against dividend income received from specified foreign company
- Tax deducted from non-taxable offshore supplies eligible for refund
- Goodwill recorded on business acquisition is depreciable
- No disallowance for failure to deduct tax at source from payments made to non-residents for purchases
- Refund and non-levy of charges by banks on transactions carried out through prescribed electronic modes
- Web promotion and social media management services not taxable in India
- Deduction allowed for diminution in value of government securities ‘Held till Maturity’ and disallowed in excess of provision in respect of rural advances
- Omission to claim deduction is not mistake apparent from record
- Consideration received for access to reports prepared based on publicly available information is not taxable as royalty
- Rights under an agreement are capital asset
- Procedure, conditions for notification of foreign pension funds for income-tax exemption
- Amendment to E-assessment Scheme, 2019 and jurisdiction of income-tax authorities
- Introduction of platform for transparent taxation - honouring the honest, power of survey and issuance of assessment order
- Appellate authorities can consider additional claim
- Certain non-residents not required to obtain, furnish Permanent Account Number
- Sale of windmills qualifies as slump sale
- Employee provident fund contribution deposited before due date of filing income-tax return is deductible
- Issuance of notice initiating audit proceedings not sufficient grounds for withholding taxpayer’s refund claim
- Activities carried out by project office does not constitute a permanent establishment
- Waiver of loan is not taxable as income from business or profession
- Capital gains on land is chargeable to tax when individual flats are sold and not when land is transferred to co-operative society
- Procedure for notification of sovereign wealth funds for income-tax exemption and press release, on new Form 26AS
- Depreciation on assets acquired on slump sale cannot exceed depreciation available to transferee and consideration exceeding cost of assets acquired qualifies as goodwill, eligible for depreciation
- Non-compete fees for employment services rendered in US are not taxable in India as per IndiaUSA tax treaty
- Guarantee charges neither taxable as interest nor as fees for technical services under
- Notional income cannot be taxed, Revenue needs to follow valuation method adopted by taxpayer
- Carry forward and set-off of losses allowed on conversion of US sub-trust into series / sub-fund of Limited Liability Company
- General Anti-Avoidance Rule cannot be applied retrospectively
- Maintenance costs not to be included while determining profits out of construction activities as per percentage of completion method
- Investment by specified persons in infrastructure sub-sectors to qualify for income-tax benefits
- Interest disallowed on borrowings advanced to sister concerns for further equity infusion
- Stamp duty value cannot be substituted for actual consideration in computation of block of assets
- Sales conducted by non-resident through Indian subsidiary constitutes business connection, subject to withholding tax in India
- Certain persons excluded from applicability of provisions relating to income from other sources and full value of consideration
- CBDT notifies certain allowances / perquisites which will be exempt / taxable for an employee availing concessional tax rate regime
- Extension of statutory time limits for compliances, inter alia, under income-tax law
- Transfer of shares, deriving value from immovable property, not taxable in India under unamended India-Cyprus tax treaty
- Income accrues / arises only on performance of all obligations under joint development agreement
- Corporate social responsibility (CSR) expenditure eligible for deduction under section 80G
- Trainings carried on by taxpayer (including information technology enabled trainings) qualify as educational activities for charitable purposes
- No further profits can be taxed in hands of dependent agent permanent establishment, if agent has been remunerated at arm’s length and income embedded therein taxed in India
- Technical handling services provided to non-IATP pool members covered under Article 8 of India-France tax treaty
- Digital content/ animation software is intangible asset, eligible for depreciation at 25%
- Mechanism of hearings in Covid situation before certain ITAT Benches
- Lessee not entitled to deduction for lease rental but to depreciation, and settop box entitled for depreciation at 60%
- Advance ruling applications for determining chargeability to capital gains tax under India-Mauritius tax treaty not admitted based on facts
- Sales through independent general commission agent does not result in creation of business connection in India
- CBDT notifies income-tax return Forms for financial year 2019-20
- Corporate guarantee fees are not fees for technical services; surcharge, education cess not applicable on India-France tax treaty rates
- CBDT prescribes minimum remuneration for fund managers
- Secondment arrangement constitutes a permanent establishment
- Taxation in absence of fees for technical services Article under India-Philippines tax treaty
- Compensation for reduction in profit sharing ratio of partner not chargeable to capital gains tax
- Offshore supplies held to be taxable in India
- CBDT issues clarification on prescribed electronic modes of accepting payments for B2B transactions
- Payment for toll-free telephone number qualifies as royalty
- Government announces tax reliefs in first tranche of special economic, comprehensive package of INR 20,000 billion
- Supreme Court rules on principle of mutuality
- CBDT issues Circular relaxing residency conditions for individuals stranded in India due to COVID-19 lockdown
- Withholding tax on payment to non-resident sport associations
- Supreme Court upholds constitutional validity of deduction of leave encashment on payment basis
- Addition towards cash credit set aside based on evidences submitted during subsequent penalty proceedings
- Taxability of international private leased circuit charges, software maintenance and service fees
- Penalty upheld for accepting cash deposits
- Whether activities of a liaison office constitute a permanent establishment?
- Validity of reassessment proceedings
- Re-issuance of circular answering frequently asked questions (FAQs) in relation to Vivad Se Vishwas Scheme
- Scope of business connection in India for event organized overseas
- Tax on indirect transfer under India-Belgium tax treaty
- Advertisement expenditure, provision for warranty and foreign exchange fluctuation loss
- Mauritius entities registered as Category 1 FPI under SEBI (FPI) Regulations 2019 not covered under indirect transfer provisions under the Act
- Employment generation incentive and expenditure on abandoned business expansion plans
- RBI allows all non-residents to invest in specified Central Government securities without any restrictions
- Glimpses of “The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020”
- Interest paid by an Indian branch of US bank is not taxable under the Act, being payment to self, prior to AY 2016-17
- COVID 19 - Extension of Nil or Lower TDS /TCS Certificate to 30 June 2020
- Parliament enacts Finance Act 2020 with amendments in certain Finance Bill 2020 proposals
- Equalisation levy on e-commerce supply or services
- Relaxation of tax and regulatory compliance timelines due to COVID-19 outbreak
- Education cess is not disallowable under section 40(a)(ii) of the Income tax Act, 1961
- Cost of technical personnel deputed to Indian subsidiary is taxable as fees for included services under India USA DTAA
- Loan given by foreign company to Indian subsidiary company is capital asset as per section 2(14) of the Act
- The Direct Tax Vivad se Vishwas Bill, 2020
- ITAT held that no deemed income arose on issue of shares at a premium as per DCF valuation
- Tax is deductible at source on year-end provisions created for ascertained liabilities
- Capital Gains on buyback of equity shares by subsidiary company taxable u/s 46A as not covered as exempt transfer u/s 47(iv) of the Act
- Payments towards up-linking, bandwith and broadcasting charges subject to TDS under section 194C
- High Court held front-end fee is interest and so deductible over the loan period, and unrealised foreign exchange gains is taxable income
- Cost of underlying shares on redemption of GDR and long-term capital loss on STT paid shares not to be ignored
2019
- Ministry of Commerce and Industry proposes relaxation of conditions for eligible start-ups to claim benefit of proviso to Section 56(2)(viib) of Income Tax Act 1961 (the Act)
- Department for Promotion of Industry and Internal Trade announces operating guidelines for Industrial Development Schemes issued in 2018 for industrial units in North Eastern region and Jammu and Kashmir
- Payment made by bank for compensating client’s loss to safeguard bank reputation/goodwill, is an allowable expense
- ITAT upholds disallowance of sharepremium received in excess of FMV as is computed after rejecting Assessee’s valuation methodology.
- AO must examine the trinity factors and pass the speaking order for the stay application filed by
the petitioner - No taxes on commission earned by non-resident agents outside India, in absence of ‘territorial nexus’ with India
- Appeal against order of ITAT would lie with High Court exercising jurisdiction at seat of that Tribunal
- Amendment made in proviso to section 142(2C) allowing assessing officer to extend timeline of special audit is clarificatory in nature
- ITAT deletes additions made u/s 56(2)(viib) to the total income on account of share premium received
- CBDT releases draft report on attribution of income to the PE
- CBDT order on furnishing ITR data to the GSTN
- Bombay HC dismissing impugned order passed under section 197 of the AO
- Subscription fees for online database not taxable as royalty or fees for technical services
- Supreme Court upholds the addition made under section 68 of unexplained share capital/premium received by the company
- ITAT rules reimbursed salary costs of seconded employee are not FTS
- Supreme Court rules assessment raised in name of nonexistent entity is invalid
- Tax authorities publish FAQs on completion of AY 2019-20 income-tax return forms
- ITAT rules that legislative amendment applies retroactively
- Protocol amending the India-Spain DTAA comes into effect in India
- India released MLI synthesised text of the India-AE DTAA
- AAR rules that shareholder is taxable on conversion of company into LLP
- Tax rate applicable to a Permanent establishment in India same as Indian Banks per non-discrimination clause
- Supporting manufacturer not at par with direct exporter for computation of benefit under section 80HHC
- Damages received by Swiss company in India is not taxable under Article 22 of the India-Swiss DTAA
- CBDT provides relief to reduce the pendency of prosecution cases and to mitigate undue hardship to taxpayers
- CBDT introduces E-assessment Scheme, 2019
- Corporate tax rates slashed and fiscal relief announced
- Newsflash: Manufacturing sector (India)
- Glimpses of “The Taxation Laws (Amendment) Ordinance, 2019”
- Technology, Media, and Telecom (TMT) Newsflash
- Sparkling Diwali: Government holds meetings with key stakeholders of public to boost economy
- Clarification in respect of brought forward losses on account of additional depreciation and MAT credit for company exercising lower rate of tax section 115BAA
- OECD’s Unified Aproach under Pillar One to address tax challenges of the digitalisation of the economy released for public consultation
- Loss from trading in shares is speculative loss as amendment to Explanation to section 73 of the Act is not retrospective.
- Tax withholding by banks on cash withdrawals – Provisions and Clarifications
- Liaison Office of a Singapore entity held to constitute PE in India and profits to be attributed as per TNMM
- Delhi High Court admits the appeal of the life insurance company on whether transfer pricing provisions are applicable
- Expenses for increase in authorised share capital attributable to bonus shares is revenue expenditure
- OECD report on “Taxing energy Use 2019” – Use of taxes for Climate action
- Indian AOP taxable at the rate applicable to a foreign company
- OECD’s proposal for ‘Global Anti-Base Erosion’ under Pillar Two, released for public consultation
- The Taxation Laws (Amendment) Act, 2019 enacted on 12 December 2019
- Penalty upheld for accepting cash deposits
- Interest paid by an Indian branch of US bank is not taxable under the Act, being payment to self, prior to AY 2016-17
- Glimpses of “The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020”
- RBI allows all non-residents to invest in specified Central Government securities without any restrictions
- Employment generation incentive and expenditure on abandoned business expansion plans
- Mauritius entities registered as Category 1 FPI under SEBI (FPI) Regulations 2019 not covered under indirect transfer provisions under the Act
- Advertisement expenditure, provision for warranty and foreign exchange fluctuation loss
- Tax on indirect transfer under India-Belgium tax treaty
- Scope of business connection in India for event organized overseas
- Re-issuance of circular answering frequently asked questions (FAQs) in relation to Vivad Se Vishwas Scheme
- Validity of reassessment proceedings
- Whether activities of a liaison office constitute a permanent establishment?
2018
- The central government issues notifications on subsidiarisation of foreign banks in India, under section 115JG of Income-tax Act, 1961
- Conversion of a private limited company into an LLP, is a transfer, but no capital gains as the transfer was at ‘book value’
- Delhi High Court* upholds prosecution charges on taxpayer for failure to file tax return under Income-tax Act *Karan Luthra TS-595-HC-2018 (DEL)
- Book value methodology cannot be used in case of preference shares to calculate excess premium received
- Reimbursement of expenditure to member of AOP does not constitute ‘share income from AOP’
- Chennai ITAT rules that amount received by foreign company from Indian subsidiary towards reimbursement of salary cost of deputed employees, is ‘FTS’
- Kerala High Court reaffirms meaning of ‘make available’ as contemplated under the term ‘Fees for included services’
- CBDT clarifies1 that preferring immunity u/s 270AA is no bar to challenge on same issue in earlier years
- Delhi Tribunal* holds that preparatory work for the purpose of entering into a tender before entering into a contract cannot be relevant for determining Installation-PE threshold period
- ITAT Ahmedabad* rejects taxpayer’s methodology for adjustment of unabsorbed loss vs. depreciation set-off with reference to Explanation 1(iii) to section 115JB *ITA No.:-209/Ahd/2018
- Permanent Establishment is constituted due to presence of equipment, network in India. Transaction processing services involves licensing of brand, IP as well and hence, a portion of income is royalty and effectively connected with PE. Attribution to be made considering functions performed by the foreign processing centre
- Ahmedabad Tribunal holds that an eligible assessee cannot be declined tax treaty benefit on grounds that assessee has not been able to furnish tax residency certificate
- Consideration received for conducting training programs, providing access to computer systems do not qualify as fees for technical services as per Article 12(5) of India-Netherlands tax treaty
- The AAR* held that doctrine of mutuality would not be breached if Applicant received certain money from incidental activity (including from non members) and it is utilized for fulfillment of objectives
- The Supreme Court* has held there cannot be attribution of profits even if there is a PE in India, if arm's length principle has been satisfied (*301 CTR 601)
- AAR holds that it has powers as well as duty to look at all aspects of the questions raised. With regard to the income, AAR held that the Applicant constitutes a PE in India and therefore the fees received is attributable to the PE and hence taxable as business income
- In Strides Shasun Limited*, the Mumbai Bench of ITAT held that the activity of preparation of ‘Dossier’ should be treated as manufacture or production of an article or thing and is eligible for deduction under section 10B of the Act
- In Nokia Networks OY* case, the majority view of Delhi Tribunal Special Bench is that Indian subsidiary does not constitute a PE in India
- ITAT Bengaluru reaffirms payment for Adwords program as royalty in case of Google India* *[2018] 93 taxmann.com 183 (Bangalore - Trib.)
- In Flipkart India (P) Ltd* case, Bangalore ITAT ruled that Flipkart’s discounts are tax deductible
- In HCL Technologies Ltd, Supreme Court explains that “total turnover” for purpose of section 10A, is sum of export turnover as well as domestic turnover
- In Mahindra and Mahindra Ltd* case, Supreme Court upholds Bombay High Court decision on cessation of loan liability as neither taxable u/s 28(iv) nor u/s 41(1) of the Act (*93 taxmann.com 32 (SC))
- In Prasar Bharati Doordarshan Kendra case, Supreme Court upholds Kerala High Court’s decision on applicability of Section 194H on payments made to advertising Agencies
- OECD releases additional guidance on attribution of profits to permanent establishments pursuant to BEPS action 7
- In Maxopp Investment case, Supreme Court holds that expenditure incurred for acquiring strategic investments is subject to disallowance u/s 14A, even if earning dividend is only incidental
- Delhi Bench of Tribunal (in the case of Daler Singh Mehndi) rules on taxability in India of income earned abroad by Indian resident artist in light of relevant tax treaties and provisions of Section 90(3) of Income Tax Act, 1961
- CBDT issues FAQs on long term capital gains tax regime
- Supreme Court (in case of Essar Teleholdings) confirms Income Tax Rules 1962 (Rule 8D) are prospective in operation
- AAR upholds existence of PE, consequential tax in India for Belgium company Rejects assessee’s argument of transient presence based on Supreme Court ruling in Formula One
2017
- Background/Facts Issues for consideration Ruling of the Karnataka High Court
- CBDT instruction on efforts for maximization of revenue collection from arrears and current demand
- Kolkata Tax Tribunal says payment received for intra-group services, reimbursement of expenses, not taxable in India. Also holds advisory services as not FTS / FIS
- Bangalore Tax Tribunal holds date of reversal of provisions important to decide whether income in respect of year-end provisions has accrued to payee or not
- CBDT clarification on indirect transfer provisions in case of redemption of share or interest outside India
- GST Council recommends revision in rates for multiple goods. Array of benefits provided to the MSME sector. Compliance burden has been eased by revising return filing due dates
- The international tax provisions of the Tax Cuts and Jobs Act
- Delhi High Court rules on powers of the central government to notify ICDS
- Supreme Court holds that mobilization fees received by non-resident for transportation of drilling units is taxable in India
- CBDT clarification for determination of POEM in cases where regional headquarter of the group is located in India
- Notification of Procedure for Filing Statement of Income from Specified Territory Outside India and Foreign Tax Credit
- Powers and functions provided to additional Authority for Advance Ruling benches
- Draft Notification - Mechanism for voluntary self-reporting of income estimate, tax payments, advance tax liability
- CBDT issues clarifications on computation of book profit for the purpose of MAT for Ind AS compliant companies
- CBDT issues modified circular clarifying no TDS with respect to component of GST on services
- CBDT issues final notification amending Rule 11UA in respect of valuation of unquoted equity shares
- Alienation of shares of Indian company by Dutch company covered under Article 13(5) of India-Netherlands DTAA, thus, not taxable in India: High Court
- India signs multilateral instrument and submits provisional list of reservations and notifications
- India signs multinational instrument for implementation of BEPS actions | Listen to the recorded webcast
- Ahmedabad Tribunal confirms payment made for sharing of standard operating procedures developed over a period of time as ‘royalty’ under Article 13 of India Germany tax treaty
- CBDT releases final notification under the amended provisions of section 10(38) of the Income-tax Act, 1961
- Delhi ITAT rejects depreciation claim on ‘government authorization / approvals’, non-compete fees and goodwill
- Calcutta High Court denies addition of waived interest income even where the taxpayer maintains accounts on mercantile basis
- Delhi High Court upholds benefit of deduction for export of data processing/ IT enabled data processing services under Section 10A/10AA.
- In the case of Hyundai Motor India Ltd v. DCIT [2017] (81 taxmann.com 5) ITAT Chennai has held that there is no liability to withhold tax on interest paid to foreign banks
- The Delhi High Court in the case of Krishak Bharati Cooperative Ltd.(the taxpayer)1 held that foreign tax credit (‘FTC’) is available in respect of dividend income received from Oman company even though no taxes thereon have been paid in Oman under its domestic law.
- In the case of Palam Gas Service, the Apex Court of India has held that expense disallowance on account of non-withholding or non-deposit of tax withheld, would be triggered even if the payment has already been made.
- The Central Board of Direct Taxes (‘CBDT’) released draft rules on valuation of unquoted equity shares
- The Apex Court of India in the case of Godrej & Boyce Manufacturing Company Ltd. (‘the taxpayer’) held that disallowance under 2Section 14A of the Income-tax Act, 1961 (‘the Act’) shall be applicable on dividend income liable to dividend distribution tax under the Act.
- The Mumbai High Court in the case of Marks & Spencer Reliance India Pvt. Ltd., has held that the cost reimbursement made by the taxpayer to the overseas entity under a secondment agreement is not chargeable to tax in India.
- The Tribunal in the case of Pearl Logistics & Ex-IM Corporation has held that income of a foreign shipping company, whose place of effective management (POEM) and control is situated wholly outside India, is not taxable in India under the India-Denmark tax treaty
- The Apex Court of India in the case of Formula One World Championship Ltd.(FOWC) has laid down the guiding principles for qualifying as a ‘Permanent Establishment’ (‘PE’) in India.
- The Ahmedabad Bench of ITAT in the case of Saira Asia Interiors (P.) Ltd. has held that royalty income of a non-resident (‘NR’) is taxable on receipt basis under India-Italy tax treaty.
- Central Board of Direct Taxes (‘CBDT’) 1notifies procedures, formats and standards for E-proceedings for communication between the taxpayer and the Income Tax Authority (‘ITA’).
- The Bangalore Tribunal in the case of Fidelity Business Services India Pvt. Ltd. has held that claim for capital gains exemption by the Mauritius holding company towards buy back of shares needs to be substantiated by evidence that buy back price is not artificially inflated.
- The Delhi Tribunal, in the case of Reebok India Company [ITA Nos. 954 and 1620/Del/2016] held that payment made by the taxpayer as 'Rights fee' was exclusively for use of marks for the purposes of promotion and advertisement and not for manufacture and sale of licensed products. Therefore, the payments were not in nature of 'royalty' or 'fees for technical services' (‘FTS’).
- The Ahmedabad bench of the Tribunal in the case of Burt Hill Design (P.) Ltd. , has held that the cost reimbursement payment made by the taxpayer to its overseas holding company under an employee secondment agreement, is not chargeable to tax in India.
- The Apex Court of India in the case of Berger Paints India Ltd1. has clarified that the term “capital employed in the business of the company” shall not include amount collected by the taxpayer on account of security premium on issue of share capital for claiming deduction under Section 35D of the Income Tax Act, 1961 (“the Act”).
- The Bangalore Tribunal in the case of Flughafen Zurich AG vs. Deputy Director of Income-tax (International Taxation) (IT(IT)A Nos. 1525/Bang/2010, 1437,1438/Bang/2013, 244/Bang/2015), held that the payments made to foreign company towards reimbursement of salary for services provided by the seconded employees to India should be taxable as Fees for Technical Services (‘FTS’) under India-Swiss Tax Treaty (‘Tax Treaty’).
- India Budget – Proposed amendments to the Finance Bill, 2017 as tabled before the Lok Sabha and approved
- CBDT issues guidelines for waiver of interest charged in case of failure to deduct tax at source in select circumstances
- In the case of Standard Chartered Grindlays Pty Ltd. (ITA No. 3578/Del/2013), the Delhi Tribunal held that interest on monies borrowed by the Indian branch from its head office outside India is not a tax deductible expense both under the domestic tax law as well as under India-UK Double Taxation Avoidance Agreement.
- The Mumbai Tribunal in the case of Atos Information Technology HK Ltd. v. DCIT (I.T.A. No. 237-240/Mum/2016), held that payments received by the taxpayer for data processing support through a network of computers systems in Hong Kong is not taxable as royalty under section 9(1)(iv) of the Income Tax Act (‘the Act’) or as Fees for Technical Service (‘FTS’) under section 9(1)(vii) of Act.
- CBDT issues clarifications on Income Computation and Disclosure Standards (‘ICDS’)
- The Delhi Tribunal in the case of Cairn UK Holdings Limited (ITA No. 1669/Del/2016), rejecting the argument of the taxpayer that the transaction is a genuine case of group restructuring, held that transfer of shares of a foreign company deriving its value solely from the assets located in India, is deemed to be situated in India and therefore, capital gains arising on the same is taxable in India.
- In the case of JSW Steel Limited (‘the taxpayer’) v. ACIT, reported in ITA No. 923/Bang/2009, the Mumbai Tribunal has held that capital surplus in respect of waiver of loan amount is in the nature of capital receipt and can neither be considered as taxable income under the normal provisions of the Income Tax Act, 1961 (‘the Act’), nor be included in the computation of book profit under section 115JB of the Act.
- The Delhi Tribunal in the case of Stryker Global Technology Center (P.) Ltd. vs. Assistant Commissioner of Income-tax (ITA No. 149/Delhi/2013), held that the rent equalization reserve, which was debited to the profit and loss account is not in accordance with Accounting Standard 19. The reserve be added back while computing book profit under section 115JB of the Income-tax Act, 1961 (‘the Act’), the Tribunal said.
- The Supreme Court dismissed the Special Leave Petition of the Revenue in the case of Sardar Sarovar Narmada Nigam Ltd. (CC No. 3018/2017) filed against the order of the High Court wherein the High Court held that in a project where different activities are integral part of the business, the taxpayer’s business shall be considered to have been set-up when first of the activities has commenced.
- The Supreme Court in the case of Director of Income-tax (IT) vs. A.P. Moller Maersk A S, held that cost reimbursed by Indian agents for utilizing global telecommunication facility cannot be treated as fees for technical services and therefore not taxable.
- The Madras High Court, in the case of CIT v. Vinzas Solutions India Private Ltd. (77 taxmann.com 279), held that income from purchase and sale of software is not in the nature of royalty under section 9(1)(vi) of the Income-tax Act, 1961 (“ITA”) as it amounts to a transaction for sale of ‘copyrighted article’ and not of ‘copyright’ itself’.
- Rationalization of MAT provisions for Ind AS compliant companies
- The Mumbai Tribunal in the case of Goldgerg Finance Pvt. Ltd. v. ACIT (I.T.A. No. 7496/Mum/2013), held that while computing book profit under section 115JB of the ITA, the deduction in respect of the share of the taxpayer in the income of an AOP, inserted vide Finance Act, 2015 w.e.f. 1 April 2016, shall be applicable retrospectively as it is curative in nature.
- The Permanent Account Number (PAN) and the Tax Deduction and Collection Account Number (TAN) can now be applied through a common application form along with incorporation of company.
- The Special Bench of the Hyderabad Tribunal in the case of Nagarjuna Fertilizers and Chemicals Limited (78 taxmann.com 264) has held that the provisions of the Double Taxation Avoidance Agreement, to the extent they are beneficial to the taxpayer, will override the machinery provisions of section 206AA by virtue of section 90(2) of the Income-tax Act, 1961.
- The Delhi Tribunal, in the case of GE Energy Parts Inc. v. ADIT (78 taxmann.com 2), held that liaison office of one of the group entity constituted taxpayer’s as well as other GE overseas entities fixed place permanent establishment (“PE”) and that GE India comprising of expatriates deputed to India and employees of Indian entity constituted dependent agency PE. The Tribunal further upheld the reassessment proceedings initiated by the Assessing Officer.
- The Ahmedabad Tribunal, in the case of DCIT v. Welspun Corporation Ltd. (77 taxmann.com 165), held that commission paid to non-resident export commission agents is not taxable in India and accordingly withholding tax provisions are not applicable. The Tribunal further held that such services are not in the nature of fees for technical services.
- The Supreme Court, in the case of CIT v. Best Corporation Ltd. (76 taxmann.com 295), held that initial assessment year under section 80-IA(5) would only mean year of claim of deduction under section 80-IA and not year of commencement of eligible business; the taxpayer has an option to choose first/initial assessment year of claim for deduction.
- The Bangalore Tribunal, in the case of Karnataka State Industrial Infrastructure Development Corporation Ltd. (‘the assessee company’) v. DCIT reported in [2016] (76 taxmann.com 360) has held that the assessee is entitled to the benefit of indexation while computing long term capital gains exempt under section 10(38) of the Income-tax Act, 1961 (‘ITA’) for the purposes of computing book profits under section 115JB of the ITA.
- The Government of India and Republic of Singapore have signed the third protocol for amendment of the Double Taxation Avoidance Agreement between the two countries.
- The Supreme Court, in the case of Jeans Knit Private Limited v. DCIT (Civil Appeal No. 11189/2016) and other cases has held that writ petitions filed before the High Courts (‘HC’) challenging the re-assessment notices issued under section 148 of the Income-tax Act, 1961 (‘ITA’) are valid. The Supreme Court also directed the respective HCs to decide the writ petitions on merits.
2016
- The Authority for Advance Rulings (AAR) in the case of Banca Sella (AAR No. 1130 of 2011) has, inter alia, held that the Indian branch office of a foreign company is a capital asset for tax purposes. However, the transfer of such branch office in a scheme of amalgamation between two foreign companies would not be chargeable to tax as capital gains, in the absence of any consideration (in which case the computation mechanism fails). The AAR further upheld the applicability of non-discrimination clause (Article 25) of India-Italy tax treaty, pursuant to which a non-resident transferor can invoke exemption from capital gains under section 47(vi) of the Income-tax Act, 1961 in a scheme of amalgamation.
- CBDT issues circular streamlining process of issue of No Objection Certificate (‘NOC’), Port Clearance Certificate (‘PCC’), filing of voyage return, and voyage assessment in the case of Foreign Shipping Companies (FSCs) [CBDT Circular No. 30/ 2016 dated August 26, 2016]
- The Government of India (GOI) has issued a notification for completing the procedures for the Protocol to India-Mauritius Double Taxation Avoidance Agreement to enter into force, as required by the laws of the respective countries. The protocol shall come into force from 19 July 2016.
- The Delhi Income Tax Appellate Tribunal (the Tribunal) in the case of Iveco S.p.A. (72 taxmann.com 195) has held that in absence of any material to prove that the services were rendered by the appellant through its Branch Office in India, Royalty income earned by the appellant from provision of such services could not be said to be effectively connected with the Permanent Establishment of the appellant in India. Hence, the Royalty income was held to be taxable as per Article 13 of the India-Italy tax treaty, and not as business income.
- The Delhi Income Tax Appellate Tribunal (“the Tribunal”) in the case of Ion Geophysical Corporation (TS-455-ITAT-2016(Del)) has held that contract revenue arising to Assessee (a US company) from ‘offshore supplies’ is not taxable in India, FOB/ FCA delivery terms substantiate that title ‘passed outside India’.
- The Mumbai Income Tax Appellate Tribunal (the Tribunal) in the case of Capgemini SA (72 taxmann.com 58) has held that corporate guarantee commission received by the appellant from its Indian subsidiary companies does not arise in India. Thus, Article 23 (Other Income) of the India-France tax treaty has no applicability and the guarantee commission was held to be not taxable in the hands of the appellant in India. Separately, the Tribunal also ruled in favour of non-applicability of surcharge in addition to the tax rate specified in Article 13 of the tax treaty in respect of Royalty income earned by the appellant.
- The Delhi High Court in the case of Steria (India) Ltd. (72 taxmann.com 1) has held that Protocol forms an integral part of a DTAA. Accordingly, the ‘Most Favoured Nation’ (‘MFN’) clause (Clause 7) in the Protocol to the India-France DTAA is self-operational and does not require a separate notification from Central Government to be effective. Overruling the AAR's decision, the High Court, held that the amount paid to offshore service provider for provision of managerial services does not constitute ‘Fees for technical services’ (‘FTS’) by virtue of restricted scope/definition of FTS under the India-UK DTAA which must be read as forming part of India-France DTAA.
- Foreign Direct Investment in Other Financial Services
- Removal of mandatory warehousing requirement for EOUs, STPIs, EHTPs etc.
- The Central Board of Direct Taxes (‘CBDT’), vide Notification No.55/2016 [F.No. 142/26/2015-TPL]/SO 2226 (E), dated June 28, 2016, has notified Income-tax (19th Amendment), Rules, 2016 (Indirect transfer rules’) prescribing the manner of determination of fair market value in certain cases and reporting requirement for Indian concern.
- The Delhi High Court overruling the AAR's conclusion has held that the situs of the owner of an intangible asset would be the closest approximation of the situs of an intangible asset. This is an internationally accepted rule, unless it is altered by local legislation. Hence, the offshore Brand –IP transfer by Fosters Australia to SAB Miller is not taxable under the domestic law (i.e. Income Tax Act, 1961).
- CBDT provides relief to investments in ‘startup’ companies – no tax on startup companies issuing shares above fair market value
- Amendments to Finance Bill, 2016 passed by the Lok Sabha and approved by the Rajya Sabha
- The Government of India and Mauritius release Protocol amending the Double Taxation Avoidance Agreement (“DTAA”) between India and Mauritius
- CBDT issues press release towards protocol for amendment of the Double Taxation Avoidance Agreement between India and Mauritius
- CBDT notifies draft rules for granting foreign tax credit under section 90 / 90A / 91 of the Income-tax Act, 1961
- Madras High Court dismisses writ petitions challenging the validity of section 94A of the Income-tax Act, 1961, Notification no. 86/2013 and Press Release issued by CBDT dated November 1, 2013 notifying Cyprus as non-cooperative jurisdiction
2015
- Interest on tax refund is not covered by definition of 'interest' under article 12(4) of India-Italy tax treaty
- CBDT clarification on cases where returns filed by FII/FPIs not to be treated as defective
- Compliances on foreign remittances to undergo a change effective 1 April 2016
- Delhi Tribunal allows claim of expenditure on free samples given to doctors/medical practitioners
- Income from offshore services of a foreign company exempt under tax treaty cannot be charged to tax in India
- “Authority to guarantee” paid to finance company, to compensate for losses on credit assistance, are not commission/brokerage
- Capital gains exempt from tax to be excluded for the purpose of computing ‘accumulated profit’
- New India-Thailand tax treaty enters into force
- Income from distribution of news and information not taxable in India
- Gujarat High Court holds that ‘international traffic’ includes the journey of a vessel operating within Indian ports if it forms part of a larger international voyage
- MAT provisions are not applicable to nationalized banks not being a ‘company’. Amendment vide Finance Act, 2012 to bring all companies within MAT is applicable only with effect from AY 2013-14.
- Consideration received for live coverage of audio-video visuals is neither ‘fees for technical services’ nor ‘royalty’
- Bangalore ITAT held that disallowance u/s 40(a)(i) cannot be made if payments are made without tax deduction on basis of nil tax withholding certificate issued u/s 195(2) of the Act
- Guidance notes on reporting requirements under rules 114F to 114H of the Income–tax Rules issued
- High Court has inherent power to review its own order
- Supreme Court holds that interest under Section 234B is leviable even if assessment order does not contain any direction for payment of such interest.
- High Court rules on sufficiency of Mauritius tax residency certificate to avail treaty benefits
- Lionbridge Technologies Private Limited (Mum ITAT)
- Mere passing of book entries which are subsequently reversed would not give rise to an obligation to withhold tax by the payer in case of transactions covered u/s 195
- Victory Aqua Farm Ltd. (Supreme Court)
- Bombay High Court holds that buyback of shares under a Scheme of Arrangement in accordance with section 391 read with section 100 – 103 of the Companies Act, 1956 is not a colourable device to evade tax
- Interest applicable for non-deduction of tax at source from year-end provision for expenses, despite provision being disallowed.
- CBDT prescribes guidelines and conditions for expediting disposal of condonation applications for delay in filing refund claim and claim of carry forward and set-off of losses
- Tribunal has power to grant extension of stay beyond 365 days in deserving cases where the delay in disposing the appeal is not attributable to the assesse – Delhi HC strikes down the third proviso to Section 254(2A) of the Act.
- CBDT issues directives to the Income tax Authorities for a prompt redressal of taxpayer’s grievances
- CBDT extends due date for filing Income-tax return for the Assessment Year 2015-16 from 31 July 2015 to 31 August 2015 for individuals, firms, trusts etc
- Explanation to Section 9 does not override the ‘source rule’ exclusion under section 9(1)(vii)(b) of the Act.
- Tribunal rules that no tax is required to be deducted on the additional liability arising on account of foreign exchange fluctuation at the time of payment
- Tribunal holds that Arranger fees are neither in the nature of interest as per section 2(28A) nor fees for technical services under section 9(1)(vii)
- Mumbai Tribunal holds that license fees and management charges do not fall within the purview of section 44C
- Discount given to Sim card distributors on prepaid cards and payment for roaming charges not liable for TDS
- Procedure simplified for grant of refund of wealth tax on account of retrospective amendment excluding ‘agricultural land’ from ‘Urban Land’.
- LTCL on sale of equity shares and mutual funds units (subject to securities transaction tax) not to be ignored in view of section 10(38) exemption, but can be set-off against taxable LTCG as per Section 70(3)
- Tribunal holds that fees under section 234E for default in furnishing TDS statements cannot be levied prior to 1 June 2015 in the absence of any enabling provision
- If the services do not enable the recipient to utilise the knowledge in future - No ‘make available’ and hence, not ‘Fees for technical services’ under India-US tax treaty. If the Associated Enterprise (‘AE’) is remunerated at arm’s length price – No profit attribution, even where AE is considered to be a Permanent Establishment
- Electronic Verification code (EVC) introduced to simplify validation of Income-tax Returns
- Activities relating to acquisition of 3D seismic data covered under section 44BB. Income from mobilisation and demobilisation of vessel outside India taxable as fees for technical services. Interest u/s 234B and 234C not chargeable to the non-resident
- Revenue expenditure is deductible from the date of ‘set-up of business’ and not from the date of ‘commencement of business’.
- JV formed to secure a contract (with scope of JV partner distinctly outlined and entire scope of work is split and fulfilled through subcontractors) – Not to be taxed as an ‘Association of Persons’
- If payee is not identified and amount payable is not ascertained, no tax is required to be deducted at source from the provision for expenses.
- Karnataka High Court rules that the DSIR is the final authority to decide whether or not, an activity constitutes scientific research
- SC rules that upfront interest payment on debentures is allowable in the year of payment and is not required to be deferred over the term of the debentures
- India Budget - Amendments to the Finance Bill, 2015
- Deeming provision in relation to indirect transfer not applicable to dividend declared and paid by foreign company outside India
- No capital gains at the time of roll over of the units of a Mutual Fund under the Fixed Maturity Plans
- Income computation & disclosure standards - notified
- India to exchange information with US and CRS countries. Indian Institutions to comply with FATCA and CRS
- Payments to a foreign company for activities inextricably connected with prospecting, extracting or production of mineral oils are taxable under section 44BB and not under section 44D of the Act
- CBDT issues directions to restrict and monitor the issuance of manual refund by Assessing officers
- Reassessment on same set of facts that were available at the time of original assessment constitutes a change of opinion and hence reassessment proceedings cannot be sustained
- India Budget 2015 – Amendments to MAT proposals
- In a major relief to FIIs, MAT proceedings put on hold by the Government
- Section 206AA of the Act does not override the provisions of DTAA
- CBDT notifies rules for FATCA and CRS compliance
- Landing and parking charges for Aircrafts are not for 'use of land' and hence not subject to TDS u/s 194-I of the Act
- Managerial services are not covered in the definition of FTS under Indo-UK Tax Treaty. Further for technical or consultancy services to fall under the definition of FTS, it must meet the condition of ‘make available’ technical knowledge, experience, etc.
- Withholding of taxes under a wrong provision may attract disallowance u/s 40(a)(ia)
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