[The following guest post is contributed by Ananya Banerjee, a 5th Year Student of University of Calcutta, Department of Law] After the Budget Speech, 2015 of the Finance Minister, the Income Tax Department has come out with a phasing out plan under the Income Tax Act. In the Speech, the Minister indicated that the corporate tax burden will be reduced from 30% to 25% in the next four years. But...
Whether CSR Expenditure is Appropriation of Profits?
[The following post is contributed by Vinod Kothari of Vinod Kothari & Co. The author may be contacted at [email protected]] A circular of the Ministry of Corporate Affairs (MCA), with a set of FAQs along with response dated 12 January 2016 through general circular no. 01/2016 has clarified that the expenditure on corporate social responsibility (CSR) is not deductible as a business...
Premium on Buyback: a Deductible Expenditure?
In an earlier post on this blog, Mr. Jayant Thakur had considered certain decisions of the Income Tax Appellate Tribunal (notably, Chemosyn v. ACIT) where the ITAT had held that “… premium paid by the company on buyback of shares of a warring shareholder group is deductible as business expenditure in the hands of the company…” It was pointed out in that post that the Tribunal had...
P&H High Court Upholds Mauritius Tax Residency Certificate
The issue of whether the grant of a tax residency certificate by the authorities in Mauritius would enable a company situated there to claim the benefit of the double taxation avoidance treaty between India and Mauritius was decided favourably by the Supreme Court in Union of India v. Azadi Bachao Andolan, (2004) 10 SCC 1. This issue resurfaced before the Punjab & Haryana High Court in Serco...
The Applicability of Minimum Alternate Tax to Foreign Investors
[The following guest post is contributed by Abhik Chakraborty, who is a 4th year student at NUJS, Kolkata] The Supreme Court in Ajanta Pharma Ltd. V. Commissioner of Income Tax-9, Mumbai [1] has clarified that the intent with which the provision related to minimum alternate tax (MAT)[2] was inserted in 1996 was to ensure that zero tax companies[3] pay at least a minimum amount of tax on their...
The Black Money Bill: Piecemeal and Superfluous
[The following guest post is contributed by Dr. Nigam Nuggehalli, who is an Associate Professor at Azim Premji University, Bangalore] The Modi government has been unique among the current and past political dispensations in giving unprecedented political currency to the issue of undisclosed foreign assets of Indian residents. The so called black money issue, always simmering under the surface in...
Corporate Benevolence: Companies May Accept Gifts, and Tax Free
[The following post is contributed by Vinod Kothari of Vinod Kothari & Co. The author can be contacted at [email protected].] When it comes the law imposing a requirement of spending on corporate social responsibility (CSR), which is 2% of the profits of the company, we come to notice all sorts of ingenious ways of companies trying to avoid or evade the requirement. Some might even go to...
The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015
In the Budget Speech 2015, the Finance Minister outlined certain broad themes surrounding the tax proposals. The “first and foremost pillar” was stated to be “to effectively deal with the problem of black money”. To that end, the Government has introduced the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 in the Lok Sabha. A copy of the Bill can be downloaded here...
Bombay High Court Ruling in Favour of Vodafone in Share Issue Case
Over the last couple of years, Indian subsidiaries of multinational companies have been faced with the unique tax issue pertaining to the issuance of shares to their parent companies. The tax department has questioned the valuation on which shares have been issued by the Indian subsidiaries and sought to apply the transfer pricing provisions under the Income Tax Act, 1961 (the Act) to impute...
Restrictions on Tax Inversions
A few months ago, we had discussed the use of “inversion” deals by U.S. companies to minimize the effect of U.S. taxes. Since then, inversions have been the subject matter of intense debate from a policy perspective. Two potential regulatory responses have been proffered. One is more short-term by which the U.S. government limits the ability of companies to carry out inversion deals by either...
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