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- 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.
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- 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  (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.
- 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
- 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.
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- 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
May - June 2015
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- 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)