Set-off of loss against income determined u/s 115BBE; TDS liability upon retrospective law and Project Office - Tax & Regulatory aspects...and lots more!
We are glad to present to you the 222nd edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
6) INNOVITI PAYMENT (2019) 178 DTR 332 (BANGALORE)relied in, [TS-6293-ITAT-2020(Bangalore)-O] on application of DCF method of share valuation for Sec 56(2)
1) ITAT: No TDS liability upon retrospective law, payment for purchase of software does not fall in the definition of royalty for F.Y. 2010-11 - ITAT rules in favour of assessee; Notes that the transaction in question regarding payment of purchase of software was completed in F.Y. 2010-11 whereas the decision of Karnataka HC in Samsung Electronics Co. Ltd. was passed on 15.10.2011, that is much later than the closure of the FY 2010-11; Further notes that subsequently, the Finance Act 2012 also introduced, retrospectively, explanation 4 to section 9(1)(vi) to clarify that payments for, inter alia. license to use computer software would qualify as .......... Click here to read and download ITAT order
2) ITAT: Income earned from sale of software, either directly to the customers in India or through Distributors or Resellers constitutes its business income and not the Royalty income – ITAT notes that the products sold to the distributors or the resellers do not confer any right on them to copy the software license and then exploit it commercially, their transactions are confined to purchasing specific products.............Click here to read and download ITAT order
3) HC : Sets aside denial of stay considering non-speaking order; Stay of demand application to be considered on merits - HC allows Writ filed by assessee (co-operative society), sets-aside AO’s as well as Pr. CIT’s orders refusing to stay collection of demand for the AYs 2017-18; Observes that Principal Commissioner’s order is a non-speaking order without considering either the question of High-Pitched Assessment or the genuine hardship to the petitioner, accordingly, remits the matter back to for fresh consideration; Assessee had submitted that AO rejected claim of deduction u/s 80P(2)(a)(i) by placing reliance on the SC judgment in the case of Citizen Co-operative Credit Society and also treated the unexplained income under Section 68 r/w Section 115BBE of the Act, the cash deposits made during the demonetization period; Assessee filed the stay of demand before the AO which was rejected on the ground that 20% of the disputed demand is not paid......... Click here to read and download HC order
4) HC: Dismisses co-operative society’s Writ seeking permission to operate an attached bank account, considers non-compliance of pre-deposit condition for stay of demand and – HC notes that, issue relates to substantial credits in the bank accounts of the petitioner (Primary Agricultural Cooperative Credit Society) of demonetized notes and such credits were thus brought to tax as unexplained money u/s 69A r.w.s 115BBE; Notes that the co-operative society neither .........Click here to read and download HC order
5) HC: Assessee is entitled to claim set-off of loss against income determined u/s 115BBE of the Act till the assessment year 2016-2017 - HC allows assessee appeal, sets aside the ITAT order and remands back for further adjudication in light of jurisdiction division bench ruling in case reported in [TS-5307-HC-2007(Madras)-O] and CBDT Circular No.11/2018 dated 19.06.2019; Notes that CBDT vide circular no.11/2019 had taken note of the legislative intent behind amendment in Section 115BBE(2), for the purpose of ......... Click here to read and download HC order
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Expert Column
Most Foreign Companies engaged in turnkey engineering, procurement, construction and installation projects are commonly seen setting up project offices (‘PO’) in India for carrying out their activities in India.
In this article, authors Pradnya Shetty and Mihir Patwa (Chartered Accountants) have identified and discussed some of the key interesting tax and regulatory aspects governing a Project Office set up. The authors highlight that in deciding whether a PO has to be set or a company incorporated in India, various factors will play a deciding role like expected duration of the projects, acceptability to the extent of additional governance and compliances a company set up will attract and mandate, etc. Further, the authors discuss the nuances of the approvals required from RBI, and applicable TDS provisions on the payments to the PO. To sum up, the authors opine that PO set up is most favoured and common set up by foreign companies who are awarded contracts for turnkey EPC projects in India, both from commercial and tax perspective. However, they caution that it involves various tax and regulatory nuisances as discussed above, which the foreign companies need to be cognizant about and take necessary steps to achieve their objective.
Click here to read article titled - Project Office - Tax & Regulatory aspects
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“Taxsutra Database”, a true Income-tax research tool, is an archive of over110460+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
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