Income-tax Act

Treaty Shopping Safari Ends Here: Footprints from Tiger Global

Summary:

The Supreme Court’s ruling in Tiger Global International Holdings has redrawn the contours of India’s tax landscape. By rejecting treaty shopping structures and affirming the reach of GAAR even for legacy investments, the Court has signalled a decisive shift toward substance-over-form in cross-border taxation. TRCs are no longer conclusive shields, and investors must now demonstrate genuine commercial substance to claim treaty benefits. This landmark judgment underscores India’s firm stance against tax avoidance and sets the tone for heightened scrutiny of offshore investment structures going forward.Continue Reading Treaty Shopping Safari Ends Here: Footprints from Tiger Global

As you sow, so you reap: ITAT holds MLI provisions adopted in DTAAs inapplicable without specific notification

Summary: The Multilateral Instrument (MLI), which had originated from the OECD’s BEPS project, was meant to fast-track adoption of anti-avoidance measures without lengthy bilateral negotiations between multiple countries. India ratified the MLI in 2019 and the Revenue argued vociferously before the Supreme Court in the case of Nestle that every change to the DTAA shall have to be notified separately to give effect to such change and succeeded. Following the aforesaid SC decision, a few recent ITAT judgments have thrown a curveball by holding that MLI provisions cannot apply automatically to the DTAAs unless a specific notification is issued. Through this blog, we analyse the impact of these ITAT decisions, which may reshape ongoing tax litigation strategies.Continue Reading As you sow, so you reap: ITAT holds MLI provisions adopted in DTAAs inapplicable without specific notification

Debunking taxation of cloud services as royalty 

Businesses are increasingly integrating cloud computing models into their operations, necessitating unambiguity regarding the position of tax leviable on such transactions under the Income-Tax Act, 1961 (“IT Act”), and tax treaties. Uniformity in the tax treatment of cross-border cloud computing models has become crucial for these businesses to plan their operations and tax costs effectively. A long-standing subject of scrutiny has been whether to consider the taxation of payment for cross-border cloud services as “royalties” or “fee for technical services” (“FTS”)/ “fee for included services” (“FIS”). However, in recent rulings, Indian courts have affirmed that such standardised services would not be liable to income tax in India.Continue Reading Debunking taxation of cloud services as royalty 

Premium Received on Redemption of Debentures: Taxed as Interest or Capital Gains?

Background

While debentures have been a common mode of raising debt for companies, there still remains ambiguity regarding the taxation of certain income earned from debentures. Taxation of premium received on redemption of debentures is one such issue. Continue Reading Premium Received on Redemption of Debentures: Taxed as Interest or Capital Gains?

Introduction

The intricacies of tax law often unfold through nuanced interpretations and amendments aimed at addressing loopholes. One such facet is the taxation of capital contributions by partners in partnership firms (including limited liability partnerships), as delineated under section 45(3) of the Income-tax Act, 1961 (“IT Act”). This provision deals with taxing transactions…