01 January 0001

Direct Tax Amicus: July 2015

The July, 2015 issue of Direct Tax Amicus features an article on ‘Corporate Guarantee – Certainty in taxation not guaranteed!’. This article analyses tax implications of various transactions arising out of a contract of guarantee between Associated Enterprises (‘AEs’) like taxation of the guarantee commission received by foreign parent and whether the commission would be allowed as deduction.

Ratio Decidendi section of this issue covers summary of order of the Income Tax Appellate Tribunal (ITAT), Kolkata Bench upholding that even if equipment is subject to inspection in India, there is no taxability if sale of equipment is concluded outside India. This section also covers Mumbai ITAT Order clarifying that while computing book profit under Section 115JB of the Income-tax Act, actual gain from sale of shares is to be considered and not the capital gain.

Other important cases reported in this issue include Delhi ITAT Order on transfer pricing observing that adjustment for expenses absent in regular course of business, should be made in profit margin of comparable and not profit margin of the assessee and order of ITAT, Bangalore holding that under India-US DTAA, services in the nature of sales and marketing do not ‘make available’ technology and hence are not taxable under fee for included services.

On Value Added Tax (VAT), Notification & Circular section covers a circular issued under Rajasthan VAT Act clarifying liability of a sub-contractor and notification issued by Commissioner of VAT, Delhi prescribing return in respect of the entities or persons engaged in providing facility of e-commerce through their web portals. Tripura High Court Order holding that right to use is transferred in the transaction where set-top boxes are given to the customers during provision of DTH service and Maharashtra Sales Tax Tribunal Order observing that sale is not in course of import even where the assessee placed back to back orders on his foreign vendors for purchases of the goods ordered by the customers in India, are the two important cases brought to readers under Ratio Decidendi of VAT portion of this issue of Tax Amicus.

July, 2015/Issue-12 July, 2015/Issue-12

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