Photo of S.R. Patnaik

Head and Partner in the Tax Practice at the Delhi NCR office of Cyril Amarchand Mangaldas. Mr. Patnaik specialises in various aspects of direct tax, such as international tax, transfer pricing, corporate tax etc. He can be reached at sr.patnaik@cyrilshroff.com

Supreme Court holds that filing of declaration under Section 10B is mandatory

The Hon’ble Supreme Court (“SC”) recently in the case of Principal Commissioner of Income Tax-III, Bangalore and another Vs. M/s Wipro Limited[1] refused to allow the assessee i.e. Wipro Limited (“Assessee”), a 100% export oriented unit, to carry forward its losses under Section 72 of Income Tax Act, 1961 (“IT Act”) due to its failure to withdraw deduction  (which was regarded as exemption) under Section 10B of IT Act within the prescribed timeline.

Continue Reading Supreme Court holds that filing of declaration under Section 10B is mandatory

Supreme Court strikes down the old benami law as unconstitutional

In a major relief to all the parties accused of being involved in benami transactions, a three-judge bench of the Supreme Court in the case of Ganpati Dealcom Pvt. Ltd.[1] has quashed all prosecution and forfeiture proceedings pertaining to transactions entered into before October 25, 2016. The old benami law i.e. Benami Transactions Act of 1988 ( “Benami Act”) was amended on the said date by the Benami Transactions (Prohibition) Amendment Act, 2016 (“2016 Amendments”) and the Supreme Court declared Section 3 and Section 5, introduced through this amendment, as unconstitutional.

Continue Reading Supreme Court strikes down the old benami law as unconstitutional

Registration as a charitable institution cannot be made subject to conditions not prescribed under the IT Act

Background

The Income Tax Act, 1961 (“IT Act”) prescribes a special taxation regime for charitable trusts and institutions which are registered under the said Act. Sections 11-13 of the IT Act enable the income of a charitable trust or institution to be exempt from tax, subject to the satisfaction of certain prescribed conditions. Before such exemption can be claimed, the charitable trust or institution needs to make an application before the Commissioner of Income Tax (“CIT”) or the Principal Commissioner of Income Tax (“PCIT”), seeking registration as a charitable trust or institution under the IT Act. The CIT or PCIT can then pass an order accepting or rejecting the application for registration.

Continue Reading Registration as a charitable institution cannot be made subject to conditions not prescribed under the IT Act

Karnataka High Court’s decision on GST levy provides a comfort to highway projects

The concessionaire or contractors/ sub-contractors of the national/ state highways face a possible levy of Goods and Services Tax (“GST”) on their supplies. However, GST is exempted for services when toll is paid to access the roads or bridges.[1] The exemption is also applicable on payment of annuity for access to roads.[2] A contract in relation to highways may deal with several aspects such as construction of a highway, shops, operation of highways, maintenance of highways, collection of toll or separate charges like overhead charges, etc. Further, with different models of highway projects, it becomes essential to analyse the nature of supply, party rendering such supply to determine if any exemption or concessional rate is available.

Continue Reading Karnataka High Court’s decision on GST levy provides a comfort to highway projects

SC Decision on Levy of GST on Ocean Freight May Act as Gamechanger

India witnessed tax revolution in 2017 when Goods and Services Tax (“GST“) was implemented to subsume existing indirect taxes on production, provision of services, sale of goods, entry, etc. The intent clearly has been to provide seamless flow of credit and avoid multiple levies on same transaction. Unfortunately, due to Integrated GST (“IGST“) payable on import of good at the transaction value, (including transport value), as well as on the procurement of transportation services as a separate supply of service, there have been instances of GST being levied twice.

Continue Reading SC Decision on Levy of GST on Ocean Freight May Act as Gamechanger

Determining Tax Implications on Hiring Foreign Employees from Related Foreign Entities

Multinational companies (“MNCs”), with a view to utilise available skill within the MNC group, often depute employees from a foreign entity to another entity of the same group. During the period of deputation, such employees often retain their employment with the original parent entity, typically to enjoy continued social security benefits. Employees under such arrangements (“Secondment Agreements”) are referred to as, inter alia, ‘seconded employees.’

Continue Reading Your Employee or Mine? – Determining Tax Implications on Hiring Foreign Employees from Related Foreign Entities

GST

Since its implementation, the levy of the Goods and Services Tax (GST) on online games has been a point of contention due to potential revenue leakage. The first question is to determine whether online game  is actually a game of skill or a kind of gambling, whilst the second issue concerns the value of services and, as a result, the amount of GST that is required to be paid. The conundrum is exacerbated by the range of games and the possible income structures that are available. The GST Council had set up a group of ministers (“GOM”) to address the corresponding disputes and uncertainties. According to the publicly available information, a decision on the rate applicable to online games and how to value the supplies is scheduled to be published soon. The Government aims to raise the applicable rate of GST on such online games to 28 % to discourage gambling-style operandi while leaving the GST rate on learning games unchanged.

Continue Reading ONLINE GAMES- The battle of applicable GST rate and valuation continues

Supreme Court Overturns Several High Court Decisions Quashing Reassessment Notices

In a recent decision of Union of India vs. Ashish Agarwal[1], the Supreme Court (“SC”) effectively overturned several High Court decisions which had quashed reassessment notices issued under Section 148 (as it existed prior to the amendments introduced through the Finance Act, 2021). The decision has a significant impact for pending reassessments, notices for which have been issued after April 1, 2021. This blog shall briefly explain the background to the appeal as well as the decision of the SC, and analyse the reasoning and impact of the decision.

Continue Reading Supreme Court Overturns Several High Court Decisions Quashing Reassessment Notices

Customs Act

In a recent decision involving Canon India, the Hon’ble Supreme Court (“SC”) had adjudicated about the authority of the officers of Directorate of Revenue Intelligence (“DRI”) to issue a show cause notice (“SCN”) under Section 28 of the Customs Act, 1962 (“Customs Act”) for the recovery of short payment of customs duty.[1] The Hon’ble SC held that a DRI officer does not have the authority to initiate proceedings through SCN issuances, since such an officer was not the person to clear the goods initially.

Continue Reading Who is proper officer for customs? The argument continues!

Income Tax

The Indian Income Tax Department (“ITD”) has been closely scrutinising the internal business restructuring of companies to weed out any unwarranted tax incentives or benefits that may be claimed by the taxpayer. This has sometimes resulted in prolonged tax litigation, with no end in sight. The ongoing dispute between the ITD and Grasim Industries Limited (“GIL”)[1] is one such example.

Continue Reading Could Demerger Consideration be Construed as Dividend Distribution – Our views on the IT Ruling on the Grasim matter