Article
Are there still broken links in taxation of ‘Broken Period Interest’?
In cases where the debt instruments are acquired in secondary markets, the acquisition of the security may entail payment of principal, unpaid interest and premiums. The deductibility of unpaid interest (colloquially referred to as ‘broken period interest’) has been a litigious issue in India. The article in this issue of Direct Tax Amicus notes that the recent judgment of Supreme Court in Bank of Rajasthan has put to rest the controversy in context of investments made by banks in government securities, however, the taxability of such interest for other taxpayers is far from settled. The authors (Karanjot Singh Khurana, Prachi Bharadwaj and Loveena Manaktala) for this purpose dive deep into the practical intricacies involving payment of broken period interest and elaborately discuss the existing jurisprudence on the issue. According to them, it would be interesting to see how the matter pans out before the higher judicial forums for characterisation of income for securities held as investments.
Notifications & Circulars
- Direct Tax Vivad se Vishwas Scheme, 2024 – Clarifications
- Direct Tax Vivad Se Vishwas Scheme, 2024 – Due date for determining amount payable extended
Ratio decidendi
- Form 10-IC is not required to be filed every year for claiming reduced rate of tax under Section 115BAA – ITAT New Delhi
- Crypto currency was covered within the meaning of capital asset prior to 1 April 2022 – ITAT Jodhpur
- Interest from funds earmarked for obtaining ‘qualifying asset’ can be reduced from the cost of such asset – Delhi High Court
- Transaction between a foreign enterprise and its Indian PE is an international transaction – ITAT Ahmedabad
- Existence of tax residency certificate (‘TRC’) and corresponding compliance to limitation of benefits (‘LOB’) under Article 29 of the respective DTAA/MLI is sufficient for availing treaty benefits – ITAT New Delhi
