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India: Tax treatment of sale of partnership assets; expeditious refunds

India: Tax treatment of sale of partnership assets

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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  • Sale of partnership, taxable as capital gain: The Supreme Court held that the taxpayer, a partner, was liable for capital gains tax on the sale of the partnership because the partnership’s assets were “capital assets” as defined by a provision of India’s tax law. The high court observed that sale of a partnership as a “going concern” could be treated as “slump sale” only if there were no values assigned to the separate assets and liabilities. However, in the taxpayer’s case, value was not only assigned to the assets, but even the liabilities were addressed when the amount of sale was apportioned among the outgoing partners. There was a specific and separate valuation for land as well as building and also machinery. The case is: Vatsala Shenoy. Read an October 2016 report [PDF 339 KB]
  • Penalty for “inaccurate particulars” on return: The Mumbai Bench of the Income-tax Appellate Tribunal held that when a taxpayer claimed both a deduction for expensing the purchase of fixed assets and deprecation on the assets (thus, a double deduction), a penalty applies because the claim itself was not bona fide and lacked good faith. Information provided by the taxpayer on the tax return was given to gain a tax advantage that otherwise the taxpayer was not entitled to, and this attempt was termed as a “filing of inaccurate particulars.” The case is: State Bank of Mauritius. Read an October 2016 report [PDF 315 KB]
  • “Expeditious refunds” required of tax officer: The Bombay High Court in addressing a taxpayer’s writ for mandamus, held that the Assessing Officer is to make a determination about a taxpayer’s request for refund independently and directed the Assessing Officer to consider and process the taxpayer's representation to process the return and refund request as expeditiously as possible, within a period of eight weeks. Read an October 2016 report [PDF 352 KB] 

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