Legal Wrangle - Episode 37 (Corporate Law)

ADMINISTRATIVE ORDERS

60

CBDT posts SIX officers as JCIT in FT&TR

CASE LAWS

2016-TII-19-HC-DEL-INTL

CEAT LTD Vs CBDT : DELHI HIGH COURT (Dated: April 7, 2016)

Income tax - Sections 2(28A), 10(15)(iv) & 237.

Keywords - condoning the breach of agreement - excess tax withheld at source - penal interest & refund.

Whether an assessee can be faulted for proceeding on the basis that the Department of Economic Affairs had approved the remittances of the penal interest without deducting TDS, where it is not the case of Revenue that it is the Foreign Trade Tax Division which had to grant such approval - NO: HC

Whether the payment of penal interest not as a result of violation of the agreement, but, in terms of the conditions imposed for condoning the breach of such agreement, is exempt u/s 10(15)(iv)(c), and hence an assessee is entitled to 'refund' of the TDS deducted & paid on such penal interest - YES: HC

Assessee's petition allowed

2016-TII-82-ITAT-KOL-INTL

GIFFORD AND PARTNERS LTD Vs DDIT : KOLKATA ITAT (Dated: April 6, 2016)

Income tax - Sections 9(1)(vii), 40(a)(ia), 143(3), 144C, 194J, 195 & 234B - India UK DTAA - Articles 5(1), 7 & 13.

Keywords - fees for professional services - make available clause - offshore & onshore services - payments to sub-consultant - permanent establishment - PE - shipyard project - tax at source & transfer of right to use.

Whether fees for technical services payable by a NRI is deemed to accrue or arise in India, where such fees are payable in respect of services utilized in a profession carried on by such NRI in India or for purposes of earning income from any source in India - YES: ITAT

Whether the existence of PE of the said NRI in India OR, rendering of services by such NRI in India, is mandated for treatinas g the fees payable by such NRI deemed accrual of income in India - NO: ITAT

Whether mere providing of technical services, without making available the right to use them, to the assessee, will be outside the ambit of the Article 13(4) of the Indo UK DTAA - YES: ITAT

Whether an enterprise should be liable for tax on profits earned in a country that is not the country of residence of the enterprise, unless the enterprise has a real and significant or substantial economic nexus with the country in which the profits accrue - YES: ITAT

Whether maintenance of a fixed place of business by a non-resident merely for collection of information, will constitute a PE in India - NO: ITAT

Whether satisfaction of 'PE' as to Article 5(1) of the Indo UK DTAA requires not only fixed place of business in India, but also carrying on business in India through that fixed place - YES: ITAT

Whether the fact that the non-resident assessee had filed its return including all receipts from the contract with the Indian entity, can be the basis to come to a conclusion that there was an admission by the assessee that it had a PE in India - NO: ITAT

Whether the 'FTS' payable by the non-resident assessee would fall within the purview of section 44DA(1), only if it is actively connected to the PE of such non-resident in India - YES: ITAT

Assessee's appeal partly allowed

2016-TII-175-ITAT-DEL-TP

ASAHI GLASS LTD Vs DCIT : DELHI ITAT (Dated: April 6, 2016)

Income tax - Keywords - capital work-in-progress - extra ordinary cost - operating costs - TP adjustment - TNMM & work-in-progress.

Whether the extra ordinary costs incurred by the assessee due to rains, deserves to be reduced from its operating costs, for benchmarking the international transaction - NO: ITAT

Whether the items which have been capitalized by the assessee, can be considered for making TP adjustment under the TNMM - NO: ITAT

Whether the operating costs which are capital in nature and have been capitalized in the balance sheet, can be included in the base amount for applying the operating profit margin rate of the comparables for computing the amount of TP adjustment - NO: ITAT

Case remanded