CIT vs. Tata Power Solar Systems Ltd |Party not barred in law to withdraw from the list of comparables a company which has been included on account of mistake of fact

(Bombay High Court) Aug 9, 2017

The High Court had to consider two questions of law at the instance of the department:

(a) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in excluding two comparables viz. Indowind Energy Ltd. and B. F. Utilities Ltd. for determination of Arm’s Length Price (ALP) of international transaction with AEs, when these two comparables were originally included by the assessee company among the comparables?

(b) Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in directing for determination of Arm’s Length Price (ALP) with regard to Sales of Rs.641,49,36,255/made to AEs and not on entire sales of Rs.909,91,45,631?

HELD by the High Court dismissing the appeal:

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India signs OECD pact to plug tax treaty loopholes

New Delhi, June 8, 2017:

India has signed a ground-breaking multilateral BEPS convention that will close loopholes in thousands of tax treaties worldwide. The multilateral instrument was signed by Finance Minister Arun Jaitley at the OECD headquarters in Paris on Wednesday.

The OECD multilateral convention aims to crack down on tax evasion around the world, be it companies or investors, anybody trying to create a structure primarily to avoid or evade taxes.

The convention will modify India’s treaties to curb revenue loss through treaty abuse and BEPS (Base Erosion and Profit Shifting) strategies by ensuring that profits are taxed where substantive economic activities generating the profits are carried out.

It will swiftly implement a series of tax treaty measures to update the existing network of bilateral treaties and reduce opportunities for tax avoidance by multinational enterprises.

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India-Korea DTAA: Advance pricing agreement with rollback option from Apr 1

The revised treaty with Korea provides for taxpayers to file for bilateral advance pricing agreement, along with rollback provision, for settling transfer pricing disputes from April 2017, the CBDT said today.

had revised the three-decade old Double Taxation Avoidance agreement (DTAA) with Korea in 2015 and the amended pact came into force from September 12, 2016.

In a statement, the today clarified that under the revised treaty beginning April 2017, applications for bilateral Advance Pricing Agreement (APA) involving international transactions with associated enterprises in Korea can be filed along with request for the rollback provision.
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Shri Vishnu Eatables(India) Ltd. v. DCIT (Punjab & Haryana

Reference to TPO is valid if AO does not supply satisfaction note before making reference

The Assessee had filed the petition before the High Court challenging the validity of reference made by AO to TPO to determine ALP of international transactions. The petition was filed in terms of Instructions no.3/2016, the requirement of passing reasoned order on the objection of the assesse regarding whether a transaction is an international transaction or not and the service of the order upon the assesse is  a condition precedent to the Assessing Officer making a reference to the TPO.

The contention of the assessee that the reference was void ab-initio was rejected. It was held that that the failure to supply the satisfaction note before reference to the TPO is at the highest a mere irregularity and does not prejudice the assessee in any manner whatsoever. The writ petition was accordingly dismissed.


Everest Kanto Cylinder Ltd vs DCIT (Mumbai ITAT)

7 October, 2016

Income-tax Appellate Tribunal -“K”Bench Mumbai ,,लेखा सद य एवं, शि जीत डे, याियक सद य सव ी राजे Before S/Shri Rajendra,Accountant Member and Saktijit Dey,Judicial Member आयकर अपील सं/ ITA No.1131/Mum/2015 : िनधा रण वष /Assessment Year-2010-11 M/s. Everest Kanto Cylinder DCIT (LTU)-1,29th Centre No.1, World 204, Raheja Centre, Free Press Journal Trade Centre,Cuffe Parade,Mumbai-5. Vs. Marg, Nariman Point,Mumbai-400 021. PAN:AAACE 0836 F (Appellant) (Respondent)

आयकर अपील सं/ ITA No.1042/Mum/2015 : िनधा रण वष /Assessment Year-2010-11 DCIT (LTU)-129th Centre No.1, World M/s. Everest Kanto Cylinder Vs.

Trade Centre,Cuffe Parade, Mumbai-5. Nariman Point, Mumbai-400 021.

              (Appellant)                                      (Respondent)
                             Revenue by: Shri N.K. Chand-CIT
                             Assessee by: Shri Shekhar Gupta
             सुनवाई क  तारीख / Date of Hearing:                  27.09.2016
             घोषणा क  तारीख / Date of Pronouncement:07.10.2016
                आयकर अिधिनयम,1961
                         अिधिनयम          क  धारा 254(1)के   के अ
तग  त आदे श
                    Order u/s.254(1)of the Income-tax Act,1961(Act)
य, राजे
  के अनुसार
लेखा सद
य                ार/ PER Rajendra A.M.-

Challenging the order dated 24.12.2014 of the DRP-1, Mumbai,the Assessing Officer (AO) and the assessee have filed cross appeals for the above mentioned Assessment year (AY). Assessee-company,engaged in the business manufacturing of gas cylinders,filed its return of income on 15.10.2010declaring income of Rs.18.84 Crores.The AO completed the assess – ment u/s. 143(3) r.w.s.144C(13) on 29.10.2015,determining its income at Rs.33.41 Crores. Vide its application,dt.26/9/2016,the assessee made submissions to allow it to produce additional evidences as per Rule 29 of the ITAT Rules,1963(Rules).It was stated that sanction letter,dt.3.3.2010,regarding loan taken by EKC,Dubai and sanction letter regarding loan taken by EKC-China could not be produced before the AO,that same were vital to decide the Ground No.3 raised by the assessee.During the course of hearing before us, the Authorised Representative(AR)made same submissions and requested that both the documents would help the Bench to dispose the case.The Departmental Representative (DR) left the issue to the discretion of the Becnh.After going through the documents we find that they are relevant to decide the issue with regard to rate of loan.Therefore,document submitted are admitted as per Rule 29 of the Rules.

ITA No.1131/M/15(By Assessee ):

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Singapore wants to delay revision of tax treaty with India

By: | New Delhi | Published: October 9, 2016

Singapore is seeking more time to revise the two-decade old tax treaty with India, saying its investors need more time to shift to source-based taxation.

India has, however, rejected any deferment in the revision of the treaty that will help prevent Singapore, which is the top source of FDI into India, from being used as a shelter to avoid taxes.

The redrawing of tax agreement between India and Mauritius in May this year to close a popular loophole, that allowed investors to skirt levies on capital gains made in India, has triggered a similar revision in pact with Singapore.

During the recent meeting with the revenue department officials, Singapore, however, pitched for delaying the revision of the tax treaty beyond March 31 saying their investors want more time, a senior official said.

India is keen to rework the treaty before April 2017 — when its revised tax pact with Mauritius will come into effect.

“Singapore wants that the revision be delayed, which is not possible,” an official said.

India and Singapore had entered into a Double Taxation Avoidance Agreement (DTAA) on May 27, 1994. The bilateral tax treaty allows Singapore to tax investments originating in either of the countries.


Earlier this year, India amended the 34-year old treaty with Mauritius allowing for source-based taxation which means that capital gains will be taxed in the country where it originates.

The move is aimed at stopping discriminating between local investors, who pay 15 per cent of their short-term profits to government, and investors who enter the country via funds typically domiciled in Mauritius or Singapore.

Since neither nation imposes capital-gains taxes on securities, and India has tax treaties with both, those investing through offshore funds can keep all they make.

“The negotiations (with Singapore) are underway. We will arrive at a conclusion soon,” the official said.

Mauritius and Singapore accounted for $22 billion of the total $40 billion India received in FDI during 2015-16.

After toiling for almost a decade to redraw the contours, India will start imposing capital gains tax on investments in shares through Mauritius from April next onwards.

Following the revised agreement, short-term capital gains tax will be levied at half the rate prevailing during the first two-year transition from April 1, 2017 to March 31, 2019. The gains are taxed at 15 per cent at present. The full rate will kick in from April 1, 2019.

During the visit of Singapore Prime Minister Lee Hsien Loong last week, the two nations decided to set up a Finance Dialogue, to be co-chaired by Finance Minister Arun Jaitley and Singapore Deputy Prime Minister Tharman Shanmugaratnam to discuss trade and economic ties.

Singapore accounts for largest FDI source with $13.69 billion, followed by Mauritius ($8.35 billion) and USA ($ 4.19 billion).

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Any tax benefit or transfer before April 1, 2017 would be outside the ambit of GAAR

Notification No. 49/2016 dated 22.6.2016

The Government had notified GAAR provisions which are applicable w.e.f. April 1, 2018. However, rule 10U prescribes that GAAR provisions shall not be applicable on any income from transfer of investment made before Aug 30, 2010. Thus, it is clear that GAAR provisions will be applicable retrospectively for investment made on or after Aug 30, 2010. To clear the air on retrospective applicability of GAAR provisions, the CBDT has revised the rule 10U. It has been provided that GAAR provisions shall not be applicable on any income from transfer of investment made before April 1, 2017.

Further, it has been provided that GAAR provisions shall not apply in respect of any tax benefit obtained from arrangement on or after April 1, 2017. Earlier this date was April 1, 2015.