Issue No. 207 / May 27th, 2020
“Taxsutra Database”, a true Income-tax Research is an archive of over 107310+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent ‘unreported handpicked ruling of SC, HC & ITAT’. A completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience; Search results supported by active filters around Court Level, Location, Case Numbers and Citation; A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
We are glad to present to you the 207th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
Earlier in Part 1 of his article, Dharan V. Gandhi ( Advocate) deliberated on tax implications in respect of payments made by Indian companies to their overseas counterparts for secondment of employees, more particularly employees deputed at senior positions. In Part 2, the author discusses the legal jurisprudence rendered by the Indian Courts / Tribunals and extensively evaluates the angle of reimbursement of salary vis-a-vis FTS.
The author highlights that, reimbursement cannot be considered as income per se and therefore, the same cannot be taxed, irrespective of gross or net basis of taxation and remarks that, “once the payment is mere reimbursement of expenses, there arises no tax implication. The subsequent discussion of FTS and Permanent Establishment (‘PE’) is without prejudice to the argument of reimbursement”. In Part 3 the author shall deal with the angle of the secondment transaction vis-a-vis constitution of a Permanent Establishment, computation of profits and a flow chart.
Note: One may also refer to Taxsutra Database Insight, wherein we have compiled 16 rulings in Part 2 & Part 3 which interpret on whether reimbursement of cost towards the services rendered by deputed employees/seconded employees tantamounts to "making available", the technical knowledge to Indian entity & hence taxable as fees for included services; deductibility of salary expenses of seconded employees upon constitution of service PE, what is crucial for bringing to tax and lots more!
Key Takeaways from Handpicked Rulings
1) No bar in law for a person dealing in land to also have investment in land - SC: Dismisses Revenue’s SLP challenging HC-order holding sale of non-agricultural land as long-term capital gains instead of business income; Earlier HC had rejected Revenue’s submission that the purpose and object of holding land could only be for business purposes and not as investment as the business of the assessee is of building construction and land developers and any gain / profit earned on sale of land ought to be taxed under the head 'business income' and not as 'capital gains'; HC had noted ..................Click here to read and download SC order
2) SC admits Revenue’s SLP challenging HC-order in case of Insurance Company - HC had dismissed Revenue’s appeal and relying on Delhi HC ruling in Oriental Insurance Co. Ltd. held that provisions of 115JB of the Act, which enables the companies to compute book-profit, may not be applicable to insurance companies.........Click here to read and download SC order
3) Interim stay granted and garnishee proceedings placed under suspension till the disposal of the stay petition - ITAT suspends operations of all the garnishee notices to the bankers of the assessee, observes that “such an undue haste in recovery of the disputed demands, in respect of which the hearing of appeal as also the stay petition is already concluded, is indeed inappropriate”; Directs Revenue authorities not to resort to, or continue with, any other coercive measures to recover the disputed outstanding demands.............Click here to read and download ITAT Order
4) State controlled Society / Committees, constituted to implement the educational policy, to be treated as an educational institution and eligible for the benefit of exemption u/s 10(23C) - HC dismisses Revenue’s appeal................ Click here to read and download HC judgment
5) Deduction u/s 54 allowable even if not claimed in the original return of income; Beneficial provision should be construed liberally - ITAT allows assessee’s appeal, remands issue back to AO with direction to consider the eligibility of the assessees` for deduction u/s 54F of the Act and allow the same if the assessee satisfies the conditions; Notes that in the original return of income, the assessee has not offered the capital gain to tax nor has he claimed deduction u/s 54F, however............Click here to read and download ITAT order
Wall of Tax News
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1) Over 107310+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent unreported handpicked ruling
2) Completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience.
3) Search results supported by active filters around Court Level, Location, Case Numbers and Citation
4) A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
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