01 January 0001

Direct Tax Amicus: January 2017


TDS on sea freight – Good times for time charter? -

Income of non-resident shipping entities posed many challenges and to ease the same Section 44B was enacted. In a recent decision, Chennai Bench of ITAT in the case of Sical Logistics dealt with the issue of interpretation of Section 172. The Tribunal has held that the terms of the agreement demonstrate that the vessel was in control of and used by service provider and not let to the payer of income, and hence the payment will not be treated as royalty. As per the decisions of Apex Court and Madras High Court, payment for time charter is royalty under the Act and warrants tax deduction at source. However the Tribunal has distinguished these decisions.


Ratio Decidendi

  • Form of participation in another enterprise as per Section 92A(2) should also be satisfied to deem two entities as Associated Enterprises – ITAT, Ahmedabad
  • Setoff of unabsorbed depreciation – ‘Year’ mentioned in Section 72A does not mean previous year – ITAT, Kolkata
  • Depreciation of goodwill claimed in revised computation of income in the assessment proceedings, allowable – ITAT, Ahmedabad
  • Benefit of indexation under Section 10(38) available for computing book profits under Section 115JB – ITAT, Bangalore
  • Liability to pay interest under Section 201(1A) even when deductee has filed a Nil return of income – Punjab & Haryana High Court
  • Transport subsidy not treatable as revenue receipt – Gauhati High Court


Notifications & Circulars

  • India-Cyprus DTAA notified
  • Notifications in relation to the taxation and investment regime for Pradhan Mantri Garib Kalyan Yojana, 2016 issued


News Nuggets

  • Tax on indirect transfers - Circular kept in abeyance


January, 2017/Issue-30 January, 2017/Issue-30

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