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June 2017

Direct Tax Amicus: April 2017

Article

GAAR – An Indian-Asian Narrative -

Taxes are mandatory and necessary. Opinion, however, has been divided on the issue as to whether taxes are avoidable. Tax avoidance, as we all know, involves deliberate actions which are not illegal or forbidden by law, and such actions result in reducing tax burden, or avoiding it altogether. Of late, countries are changing their approach to tax avoidance and codifying the ‘substance over form’ doctrine in the form of the General Anti-Avoidance Rule (GAAR). GAAR is based on a principle that transactions have to be real and are not to be looked at in isolation. Merely because the transactions are not illegal does not mean that they will be acceptable with reference to the meaning in the fiscal statute

 

Circulars and Notifications

  • Income from letting out of premises/developed space along with other amenities in an industrial park / SEZ is business income
  • Cash transaction limit not applicable to receipts from certain banks
  • Salary of non-resident sea-farer credited to NRE account of Indian bank not includible in total income

 

Ratio Decidendi

  • Exclusive access, though for a limited period, can create PE – Supreme Court
  • Pre-deposit of compounding fee not required – Application also not to be rejected for delay – Delhi High Court
  • Liability to deduct TDS is triggered at the time of payment to non-resident – ITAT, Ahmedabad
  • Section 40 (ia) cannot be invoked to deny depreciation when assessee has capitalized the sum – ITAT, Bangalore
  • Depreciation cannot be claimed on cost of construction reimbursed by assessee – Supreme Court

 

April, 2017/Issue-33 April, 2017/Issue-33

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