Tag: Taxation
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A Change in the Law of Depreciation
A recent decision of the Bombay High Court in CIT v. M/s Techno Shares & Stocks Ltd. seems to have greatly narrowed down the scope of depreciation under the Income Tax Act. Although the issue before the Court was only whether depreciation can be granted on a Bombay Stock Exchange Membership Card, the rationale of…
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Taxation of non-residents: More controversy
This blog has covered the controversy surrounding the taxation of Indian companies for engaging services from abroad. A recent decision of the Karnataka High Court has made the law even more difficult to ascertain. The decision is that of a Division Bench of the Court, in Jindal Thermal Power Co. Ltd. v. Deputy Commissioner of…
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Derivatives and Underlying Assets
In a very interesting article published in the Journal of Business Law in 2007, Professors Green and Saidov had this to say of software: “…its unique characteristics mean that it is not truly analogous to any conventional chattel with which the law is familiar… despite the fact that it is one of the most ubiquitous…
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Swiss Accounts and Banking Secrecy: Contrasting Outcomes
After prolonged discussions, the US and Swiss authorities came to an agreement earlier this month whereby UBS would disclose details of certain US account holders who are suspected of evading US taxes. The Time Magazine outlines the terms: Under the terms of the new agreement, the IRS will submit a request to Swiss tax authorities…
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Scope of Deductions under the Income Tax Act
Two recent decisions of the Income tax Appellate Tribunals have provided important guidelines on the scope of the deductions under the Income Tax Act. One deal with what expenditures cannot be deducted on grounds of being ‘prohibited by law’, and the other dealt with the extent to which foreseeable losses could be allowed as deductions…
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Contracts of Sale, Works Contracts, and TDS
Tax deducted at source (TDS) has proved to be a controversial area of law for quite some time now. One issue that has most recently come to light is likely to have enormous commercial significance – under what circumstances is a company obliged to treat an ordinary transaction as a “works contract” and not a…
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A Dubious Interpretation of Dharmendra Textile
Three earlier posts have discussed the decision of the Supreme Court in Dharmendra Textile v. Union of India, and how two benches of the ITAT, in Pune and Bombay, have attempted to narrow down the scope of the decision. This reading down has been done in cases where the fact scenarios did not come strictly…
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Is a tax avoidance motive necessary for application of Transfer Pricing provisions?
In a recent decision, ACIT v. MSS India, ITA No. 393/PN/07, the Pune Bench of the Income Tax Appellate Tribunal had to consider an interesting issue pertaining to the application of transfer pricing provisions. On an appeal after a transfer pricing assessment, the CIT (Appeals) had held in favour of the assessee; deciding that as…
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Budget 2009: Key Features and Some Thoughts
India’s Finance Minister, Mr. Pranab Mukherjee, presented the Government’s annual Budget in Parliament yesterday. While commentators brand it a mixed bag, the stock markets do not seem to have received the Budget favourably as the stock indices experienced their largest Budget-day fall in history. The purpose of this post is to highlight some of the…
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Lead Managers, Bond Issues and Taxes
Previous posts have examined the scope of Indian taxation of fees for technical services that are paid to non-residents. This is an increasingly common commercial practice, especially in the context of issuing shares or bonds abroad. An interesting issue that has arisen recently before the Bombay ITAT is whether Indian companies that make use of…
