India: Treatment of web-hosting services, 99-year lease; new tax forms

India: Treatment of web-hosting services

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below):

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  • Payments for web-hosting services not taxable as royalty: The Mumbai Bench of the Income-tax Appellate Tribunal held that web-hosting services provided by a foreign company are not taxable in India. Payment for providing web-hosting service, even with the help of sophisticated scientific equipment, is not the use of scientific equipment when the person making the payment does not have an independent right to use that equipment or have physical access to it. The case is: DDIT v. Savvis Communication Corporation. Read an April 2016 report [PDF 310 KB]
  • No withholding on 99-year leasehold rights of real property: The Madras High Court held that an upfront payment for the acquisition of leasehold rights over immovable property for a period of 99 years is not rental income and as such is not subject to withholding (deduction) of tax at source. The case is: Foxconn India Developer (P) Ltd. v. ITO. Read an April 2016 report [PDF 348 KB]
  • Technical error in income tax return does not defeat tax treaty benefit: The Mumbai Bench of the Income-tax Appellate Tribunal held that a mere technical error in the taxpayers income tax return filed does not defeat the taxpayer’s claim for entitlement to tax treaty benefits. The case is: Pramerica ASPF II Cyprus Holding Limited v. DCIT. Read an April 2016 report [PDF 291 KB]
  • Constitutionality of Cyprus as “notified” jurisdiction: The Madras High Court held that section 94A of the Income-tax Act that lists Cyprus as a “notified” jurisdiction is constitutionally valid. The case is: T. Rajkumar, K. Dhanakumar and T.K. Dhanashekar v. UOI, Central Board of Direct Taxes, ITO. Read an April 2016 report [PDF 371 KB]
  • New income-tax return forms: The Central Board of Direct Taxes (CBDT) released Notification No. 24/2016, announcing the revised income tax return forms for Assessment Year 2016-17. Read an April 2016 report [PDF 281 KB]

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