No Tax Implications On Business Profits Earned On Reinsurance Business In Absence Of Fixed Place PE in India: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that there are no tax implications on business profits earned on account of the reinsurance business in the absence of a fixed place permanent establishment (PE) in India.The two-member bench headed by Pramod Kumar (Vice President) and Anikesh Banerjee (Judicial Member) has observed that the existence of the dependent agent permanent establishment (DAPE) is wholly tax-neutral in India. The business profits earned by the...

Existence Of Dependent Agent Permanent Establishment (DAPE) Is Of No Tax Consequence, If Agent Is Paid Arm's Length Remuneration: ITAT

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT)has ruled that the business profits embedded in the reinsurance premium received by a non-resident reinsurance company, is not taxable in India if the company has no permanent establishment (PE) in India which is at its disposal.The bench of Pramod Kumar (Vice President) and Anikesh Banerjee (Judicial Member) held that unless it is shown that an agent has not been paid an arm's length remuneration by the assessee, the...

ITAT Suggests Government To Work-Out Mechanism To Ensure Tax Recovery From ARCs/Banks On sale Of Security Assets

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has suggested the government work out a mechanism to ensure tax recovery from Asset Reconstruction Companies (ARCs)/banks on the sale of security assets."It is time that the Government seriously considers protecting its legitimate interests by ensuring some mechanism to ensure that the tax liability on the capital gains is duly recovered from the borrower whose property is sold, and when it is not possible to do so on account of the...

ESOP Cross Charges Paid To Overseas Ultimate Holding Company Is Allowable Expenditure: ITAT Allows Deduction To HP

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT), while ruling in favour of the HP, held that employee stock option plan (ESOP) cross charges paid to overseas ultimate holding companies are an allowable expenditure.The two-member bench headed by N.V. Vasudevan (Vice President) and Chandra Poojari (Accountant Member) has observed that the ESOP expenditure incurred is a compensation/incentive to the employee and has a direct nexus with his/her employment. The compensation to the...

Cash Deposits Made Out Of Withdrawals For The Purpose Of Daughter's Marriage: ITAT Delete Addition

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee had explained that deposits were made out of cash withdrawals made earlier for the purpose of her daughter's marriage.The bench of Saktijit Dey (Judicial Member) has observed that the explanation furnished by the assessee was believable when the Assessing Officer has not brought on record any contrary material to demonstrate that the assessee must have incurred more expenditure on her daughter's marriage than...

Distribution Fees Paid By Google India To Google Ireland, For Distribution Of AdWords Programme In India, Not 'Royalty' : ITAT

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the distribution fees paid by Google India to Google Ireland under a Distribution Agreement, under which Google India was appointed as a distributor of AdWords programme to advertisers in India, is not in the nature of 'Royalty' under the India-Ireland DTAA. The Bench of George George K (Judicial Member) and Padmavathy S (Accountant Member) held that unless the non-resident, who is engaged in the sale of...

ITAT Deletes Fees Related To The Period Of Tax Deduction Prior To June 1, 2015

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the levy of late fees of INR 40,000 related to the period of the tax deduction prior to 01.06.2015.The two-member bench of Rahul Chaudhary (Judicial Member) and M. Balaganesh (Accountant Member) has relied on the decision of Karnataka in the case of Fatehraj Singhvi Vs. Union of India in which it was held that the notice under Section 200A of the Income Tax Act for computing late fee under Section 234E of the Income Tax...

Any sum paid to an employee as a bonus or commission to be allowed as a deduction: ITAT Delhi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that any sum paid to an employee as a bonus or commission for services rendered has to be allowed as a deduction.The bench of Saktijit Dey has observed that the reasonableness of the payment or the adequacy of services rendered by the employee is not relevant factors in deciding the allowability of a deduction.The disabling provision of section 36(1)(ii) provides that "if the sum so paid is in lieu of profit or dividend," it...

Contract For Extended Warranty Of Bentley Cars, Entered Into By Exclusive Dealer With Indian Customers, Does Not Constitute A Dependent Agent PE In India: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that contract for extended warranty of Bentley Cars, entered into by an exclusive dealer with the Indian customers, does not constitute a dependent agent PE in India. The Bench of Saktijit Dey (Judicial Member) and Dr. Brr Kumar (Accountant Member) noted that the assessee/exclusive dealer of Bentley Cars purchased the extended warranty from a unit of the Bentley Pre-Administrative Services, which it further sold to...

Liquidated Damages Received By Shipping Company, Not Exempt Under 'Tonnage Tax Scheme': ITAT

The Visakhapatnam Bench of theIncome Tax Appellate Tribunal (ITAT)has ruled that liquidated damages received by a shipping company cannot be included in computation of tonnage tax and therefore, they are not exempt under the 'Tonnage Tax Scheme', as provided under Chapter XIIG of the Income Tax Act, 1961. The bench of Duvvuru RL Reddy (Judicial Member) and S Balakrishnan (Accountant Member) held that the liquidated damages are not directly received from the shipping activity and that...

Income Tax Exemption Eligible On Activities Undertaken For Advancement Of General Public Utility: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the income tax exemption under Section 11 of the Income Tax Act is eligible for activities undertaken for the advancement of general public utility.The two-member bench headed by Pramod Kumar (Vice President) and Rahul Chaudhary (Judicial Member) has observed that the activities of the appellant were directed toward the benefit of investors and potential investors, forming part of the general public and not limited to the...

Tax Cases Weekly Round-Up: 16 October To 22 October, 2022

Supreme Court Valuation Of Shares For The Purpose Of Gift Tax Should Take Into Consideration Limitation And Restrictions: Supreme Court Case Title: Deputy Commissioner of Gift Tax Versus M/s BPL Limited Citation: 2022 LiveLaw (SC) 848 The Supreme Court has held that the valuation of shares for the purpose of gift tax must take into consideration the limitations and restrictions. The division bench of Justice Sanjiv Khanna and Justice J.K. Maheshwari has observed that the...