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December 2016

Direct Tax Amicus: October 2016

Article

Do taxes cloud novelty of SARs ?

Stock Appreciation Rights, also known as SARs are a novel way of rewarding the employees of an organisation by granting them the right to benefit from any appreciation in the value of the common stock (shares) of a corporation. However, they pose many interesting questions from the taxation point of view. Are benefits under SARs taxable as income from salary, are they capital gains, do they represent only notional gains?

 

Ratio decidendi

  • Proceedings cannot be continued against transferor entity after merger – ITAT, Chennai
  • Aggregation of payment of royalty with other international transactions is permitted – ITAT, Bangalore
  • Offshore supplies in case of a turnkey contract - when taxable – AAR
  • Interest on refund allowable when delay in raising legal claim and not in proceedings – Gujarat High Court

 

Notifications & Circulars

  • CBDT notifies Form No. 68 under Rule 129 for making application seeking immunity from penalty and prosecution
  • Rule 6A for claiming expenditure incurred for obtaining rights to use spectrum for telecommunication services introduced
  • CBDT notifies revised ICDS to be applicable from A.Y. 2017-18

 

October, 2016/Issue-27 October, 2016/Issue-27

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