Issue No. 202 / April 15^th, 2020   

Dear Professionals,

“Taxsutra Database”, a true Income-tax Research is an archive of over 106700 + 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 202^nd edition of ‘Taxsutra Database’, where we keep you updated with recent rulings.

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Taxsutra Database - Expert Column 

Multinational companies often depute their employees overseas to perform certain assigned activities, to provide technical assistance, or provide skill-development opportunities to employees etc. Reimbursement of salary costs of such ‘Seconded Employees’, unless carefully structured, can result in serious tax implications, both for the Indian subsidiary and the overseas company.

In this regard, Dharan V. Gandhi ( Advocate) in Part 1 of this 3 parts article series, deals with the tax implications in respect of payment made by Indian companies to their overseas counterpart for secondment of employees, more particularly employees deputed at senior positions. In Part 2, the author shall evaluate the angle of reimbursement vis-a-vis FTS and Part 3 deals with the angle of the secondment transaction vis-a-vis constitution of a Permanent Establishment 

Click here to read the article titled, “Secondment of employees and tax litigation – A perpetual battle – Part 1”

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Key Takeaways from Handpicked rulings

1) ITAT: Investigation Wing is part of Income Tax Department, not an external law enforcement agency – ITAT dismisses Revenue’s appeal, holds that exception in para 10(e) of the Circular No. 3/2018 which has been referred by the ld DR relates to cases where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of GST Intelligence (DGGI)..............Click here for details

2) HC: Cash credited in the books of Account maintained for any previous year cannot be taxed in next financial year – Goa Bench of Bombay HC holds that as per definition of the expression “previous year” as defined in Section 3 of the IT Act, AO was not justified to bring credit found during FY 2006-07 as the assessee income for the assessment year 2009-10,..................Click here for details

3) HC: AO must establish deliberate defiance or wilful contravention of the law – HC holds that mere conclusion in the assessment order that the assessee had failed to collect the Securities Transaction  Tax (STT) or had failed to pay such STT to the credit of the Central Government, would not .......... Click here for details

4) SC: Carry forward of loss cannot be disallowed merely because Returns were filed in the old form – SC dismisses Revenue’s SLP against HC order considering that assessee has filed the return of income within the due date, though it’s in old form amounts to sufficient compliance of the provision; The AO had disallowed carry forward loss relating to AY 2007-08 on the ground that the assessee did not file.......... Click here for details

5) SC: Depreciation claim withdrawn during subsequent search proceedings, would not give rise to penalty - SC dismisses Revenue’s SLP challenging HC order quashing penalty proceedings initiated u/s 271(1)(c); AO noticed that during search proceeding as per the statement u/s. 132(4) director of the company reduced the claim of depreciation on IPRs to avoid litigation and to buy peace; AO initiated and levied the penalty invoking Expl. 5A to section 271(1)(c) and CIT(A) sustained AO’s order;......... Click here for details

6) ITAT Third Member - Explanation to section 73 does not differentiate between 'delivery based transactions' and 'derivative transactions in F&O segment' and same applies to the entire business of purchase and sale of shares, whether such trading is delivery based or non-delivery based and, whether there is ............. Click here for details

7) ITAT - NRI Stayed in India for 283 days, not entitled to exemption u/s  10(4)(ii) – ITAT upholds CIT(A) order that the assessee would be a "person resident in India" as per clause (v) of section 2 of FEMA, not eligible for exemption u/s 10(4)(ii); States that exemption of interest on Non-Resident (external) accounts, both.......... Click here for details

8) HC: Fess u/s 234E can be imposed, expenses cannot be disallowed – HC holds that non-filing TDS related documents at the time of filing of return of TDS cannot take away the benefit which will accrue to the assessee under............ Click here for details

9) HC: Notice u/s 143(2) is necessary in case of assessment proceedings u/s 158BC – God Bench of Bombay HC admits cross objection filed by assessee though ITAT has not given any finding against the assessee and at the time when this Appeal was admitted no cross-objections were filed earlier as the issue, whether notice u/s 143(2) of the IT Act is necessary or not had been decided by the.............. Click here for details