India: Transfer of shares to sub-subsidiary | KPMG | GLOBAL

India: Transfer of shares to sub-subsidiary; application of loss offsets

India: Transfer of shares to sub-subsidiary

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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  • Service on taxpayer’s authorised representative: The Supreme Court held that service of a notice to an authorised representative of the taxpayer is deemed to be service on the taxpayer. The case is: Dharam Narain. Read a March 2018 report [PDF 696 KB]
  • Sales of shares to second “step-down” subsidiary: The Kolkata Bench of the Income-tax Appellate Tribunal held that a sale of shares of a subsidiary to second step-down 100% subsidiary (a “sub-subsidiary”) of the taxpayer is not regarded as a transfer under section 47(iv) of the Income-tax Act, 1961. The case is: Emami Infrastructure Ltd. Read a March 2018 report [PDF 461 KB]
  • Set-off losses from current year income: The Mumbai Bench of the Income-tax Appellate Tribunal held that the taxpayer is entitled to set off losses from its current year’s income. The taxpayer was not seeking to carry forward current year losses to set off, but was seeking to offset brought-forward losses from earlier years to the current year. Thus, provisions of section 79 would not apply. The case is: Wadhwa & Associates Realtors Private Ltd. Read a March 2018 report [PDF 459 KB]
  • Payment for referral fees under India-Switzerland income tax treaty: The Mumbai Bench of the Income-tax Appellate Tribunal held that referral fees paid by an Indian group company of the taxpayer to a branch of a Swiss bank—fees paid for referring clients in India—were not in the nature of “fees for technical services.” The fees were in the nature of business income, and because the taxpayer’s permanent establishment (PE) in India had no role to play in the performance of such referral activities, the fees were not attributable to the PE in India. Therefore, payment for the referral services was not taxable in India under India-Switzerland income tax treaty. The case is: Credit Suisse AG. Read a March 2018 report [PDF 426 KB]
  • Provident fund and pension withdrawal: The Employees’ Provident Fund Organisation issued guidance about provident fund and pension withdrawal claims. Read a March 2018 report [PDF 396 KB]
  • “Place of effective management” under India-Mauritius income tax treaty: The Mumbai bench of the Income-tax Appellate Tribunal held that if the place of effective management of an enterprise is not located in one of the country signatories to the treaty, but is instead located in a third country, the benefit of Article 8 (shipping and air transport) of the India-Mauritius income tax treaty is not available to the taxpayer. The case is: Bay Lines (Mauritius). Read a March 2018 report [PDF 617 KB]

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