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India: Loss carryforwards when shareholding changes; tax treaty rate controls

India: Loss carryforwards when shareholding changes

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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  • No loss carryforward when a change in shareholding, but no implications for unabsorbed depreciation: The Mumbai Bench of the Income-tax Appellate Tribunal held that the taxpayer could not carry forward unabsorbed losses when there was a change of shareholding. However, the applicable tax law provision (section 79) did not limit the taxpayer’s ability to carry forward unabsorbed depreciation. The case is: Credila Financial Services Private Ltd. Read a February 2018 report [PDF 440 KB] 

  • Income tax treaty’s rate of withholding tax takes priority over tax rate under income tax law: The Delhi High Court held that when a non-resident conducts operations from outside the territory of India and the government of the country (Singapore) where the operations are conducted has entered into a tax treaty with India, the rate of tax is governed by the provisions of the income tax treaty. The tax treaty provides for a withholding tax rate of 10% on fees for technical services (instead of the 20% rate under the tax law). The case is: Danisco India Private Ltd. Read a February 2018 report [PDF 386 KB]

  • Capital gains treatment of certain residential property and fixtures: The Income-tax Act, 1961 allows for long-term capital gains treatment for specified investments in residential housing. The Ahmedabad Bench of the Income-tax Appellate Tribunal, accordingly, held that the taxpayer was eligible for such treatment for a claim of qualifying investments made in residential property—along with the cost of furniture and fixtures. The case is: Rajat B Mehta. Read a February 2018 report [PDF 588 KB]

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