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Thangadurai V.P

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Principal Associate in the Tax Practice at the Delhi NCR office of Cyril Amarchand Mangaldas. Thangadurai VP is an expert in providing advisory and litigation services on various aspects of direct tax laws including corporate tax, international tax and transfer pricing.

He has made representations and had briefed senior counsels in making representations before various judicial fora including ITAT, High Court and Supreme Court of India. He also has expertise in advising various in-bound and out-bound M&A transactions. He has been contributing written articles to various reputed journals and publishers. He has also been part of the committees which organized some of the most reputed taxation moot court competitions in India. He can be reached at thangadurai.vp@cyrilshroff.com

The India–Mauritius Double Tax Avoidance Agreement (“DTAA”), entered into in 1983, has since been the subject matter of contentious litigations. The well-drafted and reasoned ruling of the Delhi High Court (“Delhi HC”), which explains the availability of benefits to a Mauritius-based investor, the significance of the tax residency certificate (“TRC”), the limitation of benefits (“LoB”) clause, and the grandfathering provision in the treaty, has provided much-anticipated relief and certainty to the taxpayers.Continue Reading Delhi High Court grants tax-treaty benefits to Tiger Global’s Flipkart exit

First judgment on GAAR holds bonus-stripping to be an impermissible tax-avoidance arrangement

The provisions of General Anti-Avoidance Rules (“GAAR”) were implemented into Income Tax Act, 1961 (“IT Act”), for the first time with effect from the financial year 2017–18. The GAAR provisions provide the Indian Revenue Authorities (“IRA”) with wide powers, including even recharacterising a transaction, ignoring a part or the whole of a series of transactions, disallowing expenses incurred, etc., if the main purpose of the transaction was to obtain tax benefits. Considering the aggressive nature in which the IRA generally scrutinises the GAAR cases, the industry is always apprehensive that these GAAR provisions could be invoked in a wide-spread manner. However, much to the relief of the taxpayers, the IRA have rarely invoked these provisions.Continue Reading First judgment on GAAR holds bonus-stripping to be an impermissible tax-avoidance arrangement

Google Adwords program is not taxable as either “royalty” or “Fee for technical services” in India

The Income Tax Appellate Tribunal, Bangalore (“Tribunal”), recently in Google Ireland Ltd. v. DCIT[1] allowed an appeal by Google Ireland Ltd (“Google Ireland”) and held that the payments received from Google India Pvt Ltd (“Google India”) for granting marketing & distribution rights of Google AdWords program were not in the nature of “royalty” or fee for technical services (“FTS”) and consequently it could not be brought to tax in India.Continue Reading Google Adwords program is not taxable as either “royalty” or “Fee for technical services” in India

Cognizant’s High Court approved scheme of arrangement was held to be a colorable device by Chennai ITAT

The ITAT recently dismissed an appeal and slammed Cognizant India Private Limited (“Cognizant India”) for what it perceived as  using a colorable device to evade taxes during its INR 190 billion share buyback exercise.Continue Reading Cognizant’s High Court approved scheme of arrangement was held to be a colorable device by Chennai ITAT

Share subscription above fair market value would be subject to angel tax

The Bombay High Court has recently allowed a writ, challenging a reassessment notice served on the Assessee (by the income tax department) for FY11-12 on share premium issued by it. The assessing officer, however, failed to come up with any reasonable grounds that led him to believe that income had escaped assessment during the relevant FY. 

Section 56(2)(viib) was introduced into the (Indian) Income Tax Act, 1961 (“IT Act”) as an anti-abuse provision with effect from FY12-13, according to which, if a company issues shares at a value higher than its fair market value, then it will have to pay tax (angel tax) on such incremental value. Rule 11UA of the (Indian) Income Tax Rules, 1962 (“IT Rules”) provides mechanism for computing fair market value.Continue Reading Share subscription above fair market value would be subject to angel tax

Income Tax Act

In the case of Manas Vs. Income Tax Officer[1], the Hon’ble Madras High Court (“HC”) took serious objection to the taxpayer’s attempt at misleading the Court. The taxpayer had filed a writ petition seeking quashing of the reassessment proceedings and satisfaction order passed under Section 148A of Income Tax Act, 1961 (“IT Act”).Continue Reading Madras High Court takes taxpayer to task for mischief with costs

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

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