Factors leading to the formation of Dependent Agency Permanent Establishment

Case: Audi Ag vs. DCIT (It) 1(1)(2), Mumbai ITAT Outcome: Assessee Facts The Assessee was an associate company of a company incorporated in Germany and was engaged in the business of manufacturing car and selling them worldwide and was appointed as exclusive distributors of its cars in India. During the year under consideration, the Assessee offered … Continue reading Factors leading to the formation of Dependent Agency Permanent Establishment

Secondment of employees: Formation of Permanent Establishment in India. 

Case: Teradata Operations Inc. United States vs. DCIT, ITAT Delhi Outcome: Remand Facts The employees were seconded to Teradata India under a secondment agreement under which those employees worked as employees of the Indian company.The seconded employees worked under the control and supervision of ‘Teradata India’.The salary of seconded employees was disbursed by the Assessee … Continue reading Secondment of employees: Formation of Permanent Establishment in India. 

Failure in the submission of PAN to the person making payment: Rate as Section 206AA vs tax treaty rate

Case: Shriram Capital Ltd vs. Director of Income Tax, Madras HC Outcome: Assessee Facts The Assessee had engaged the services of a foreign law firm for the purposes of acquiring insurance business in Indonesia. The Assessee had filed an application under section 195 for exemption from deduction of tax at source on the payment being … Continue reading Failure in the submission of PAN to the person making payment: Rate as Section 206AA vs tax treaty rate

Conditions as mentioned in section 92A(1) & 92A(2): Whether mutually inclusive?

Case: Sovereign Safeship Management Pvt. Ltd. vs. The Income Tax Officer Ward 13(2)-2, Mumbai ITAT Outcome: Partial Facts Shri Rajeev Kumar Singh, the director of the Assessee Company after thorough discussions with its former employer, agreed to become a 13% shareholder in a newly floated company named M/s. Sovereign Ship Management Ltd, UK, in June … Continue reading Conditions as mentioned in section 92A(1) & 92A(2): Whether mutually inclusive?

Payments made for the purchase of the software: Scope of the definition of the term ‘Royalty’ as per India-USA tax treaty.

Sandvik Machining Solution vs. ACIT, Pune Outcome: In favour of Assessee Facts The Assessee is a company incorporated in Sweden, received payments for the Information Technology support services rendered by it to an Indian entity.The Assessing Officer opined that the payment received was taxable as 'Royalty’ as per section 9(1)(vi) of the Act, as well … Continue reading Payments made for the purchase of the software: Scope of the definition of the term ‘Royalty’ as per India-USA tax treaty.

Loan advanced to a group company which is neither a registered shareholder nor a beneficial owner: Applicability of provisions of ‘deemed dividend’ under section 2(22)(e)

Khorakiwala Holdings and Investments Pvt Ltd vs. ACIT Outcome: In favour of Assessee Facts The Assessee was a holding company owning 90.31% of equity shares of the capital of M/s. CISPL and M/s. CISPL further held 99% of the equity share capital of M/s. BTPL. All these companies were a group company of M/s. Wockhardt … Continue reading Loan advanced to a group company which is neither a registered shareholder nor a beneficial owner: Applicability of provisions of ‘deemed dividend’ under section 2(22)(e)

Disallowances regarding issues not covered in limited scrutiny: Jurisdiction of an assessing officer

Shri Narendrakumar Rameshbhai Patel vs. DCIT Outcome: Partial Facts The Assessing Officer issued a notice under section 143(2) only for the investigation of mismatch of income with form 26AS.However, in the present case, the Assessing Officer converted the limited scrutiny into complete scrutiny and added the capital receipt as business receipt without obtaining any approval … Continue reading Disallowances regarding issues not covered in limited scrutiny: Jurisdiction of an assessing officer

Can the scope of a Limited Scrutiny Assessment be Expanded u/s 143(2)?

A limited scrutiny assessment is one which is undertaken by the assessing officer when he/she finds certain discrepancies in the income tax return which he/she believes need to be investigated further. In essence, when the assessing officer has reason to believe that a certain amount of income of the assessee has escaped the tax net … Continue reading Can the scope of a Limited Scrutiny Assessment be Expanded u/s 143(2)?

What we added to the Telescope this week!

Taxability of an offshore discretionary trust having resident and non-resident beneficiaries: Implications at time of accrual of income vs distribution of income Know the tax implications on discretionary trusts that are set up outside India. Offshore discretionary trusts can be set up by a resident or a non-resident of India and have resident as well … Continue reading What we added to the Telescope this week!

ITAT Bangalore Decides: Can the Differential Amount Between the Bank Deposit and the Profit and Loss Account be Treated as Undisclosed Income?

Case name: Avalappa Gopal v. ITOForum: Bangalore ITATMember: Chandra Poojari Background The AO observed on comparison of assessee’s bank statement with the Profit and Loss account furnished by the assessee that there is a difference of around INR 15.56 lakhs between the two. The AO, thus, treated the same as undisclosed income of the assessee. … Continue reading ITAT Bangalore Decides: Can the Differential Amount Between the Bank Deposit and the Profit and Loss Account be Treated as Undisclosed Income?