Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: cpt :: form 3cd :: VAT RATES :: list of goods taxed at 4% :: due date for vat payment :: ACCOUNTING STANDARDS :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: TDS :: articles on VAT and GST in India
From the Courts »
 M/s Ess Distribution (Mauritius) S.N.C.Et Compagnie Vs. Assistant Commissioner Of Income Tax, Circle -1(2)(2) International Taxation, New Delhi
 Commissioner Of Income Tax (Ltu) Vs. ESPN Software India Ltd.
 Bses Rajdhani Power Ltd. Vs. Principal Commissioner Of Income Tax,
 ITO vs. Gymkhana Club (ITAT Chandigarh)
 SRD Nutrients Private Limited vs. CCE (Supreme Court)
 The Commissioner Of Income Tax-Exemption Vs. The Fertilizers Association Of India
 The Pr. Commissioner Of Income Tax-Central-1 Vs. Sameer Gupta
 Msd Pharmaceuticals (P)ltd. Vs. Additional Commissioner Of Income Tax & Anr.
 The Chamber Of Tax Consultants vs. UOI (Delhi High Court)
 M/s Ess Distribution (Mauritius) S.N.C.Et Compagnie Vs. Assistant Commissioner Of Income Tax, Circle-1(2)(2) International Taxation, New Delhi
 M/s Ess Advertising (Mauritius) S.N.C.Et Compagnie (Earlier Known As M/s Espan Star Sports Mauritius Vs. Assistant Commissioner Of Income Tax, Circle-1(2)(2) International Taxation, New Delhi

Foreign cos too can get lower capital gains tax benefit: ITAT
November, 16th 2009

Foreign companies or individuals, including foreign institutional investors, having business or profession in India can enjoy lower capital gains tax on off-market deals if the stocks are purchased in foreign currency.

According to a recent decision of the Mumbai bench of the Income Tax Apellate Tribunal, non-resident companies and individuals are entitled to a beneficial rate of tax of 10% on long-term capital gains arising from the sale of shares of listed entities. Earlier, non-resident assessees were taxed at the rate of 20%.

Currently, off-market deals attract a capital gains tax of 20% with indexation benefit (where the gain is adjusted for inflation) and 10% without indexation benefit. While this was largely perceived to apply to residents, the tribunal has now spelt out that foreigners are also entitled to the lower rate of tax.

There should not be any discrimination between a foreign and an Indian entity in this regard, said the tribunal.

The tribunal further held that non-resident assessees can also use the option of adopting fair market value of shares while calculating the cost of acquisition of such shares. Under the Income Tax Act, companies can claim April 1, 1981, as the date of acquisition of shares for transactions effected prior to April 1981. However, this benefit was earlier not allowed to foreign companies.

The decision of the tribunals Mumbai bench will benefit companies and non-residents that are currently making huge investments in shares of Indian companies. Such companies have been seeking advance ruling on the issue, prior to effecting such transactions.

The tribunals decision was passed in the case of Chicago Pneumatic Tool, which had sold shares of an Indian company, consisting of ordinary shares and bonus shares. For calculating the acquisition cost, the assessee computed its long-term capital gains tax liability and applied the prevailing exchange rate. Subsequently, the assessee also claimed the option of fair market value of the shares by indexing the value to April 1, 1981.

Since Chicago Pneumatic Tool claimed fair market value for calculating its acquisition cost, the assessing officer of the I-T department held that the beneficial rate of 10% wont apply as the benefit of indexation is not available to non-resident assessees.

The assessees counsels contended that the benefit of lower tax rate of 10% is applicable and what is relevant is the gain arising from the transaction and not the status of the assessee.

The tribunal held that the eligibility to avail the benefit of indexed cost is not a sine qua nonea pre-requisitefor applying the reduced rate of 10%, prescribed in Section 112(1) of the Income Tax Act. Relying on the judgements passed in the cases of McLeod Russel India and Alcan Inc, the tribunal said Chicago Pneumatic Tool is entitled to 10% rate of tax.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Internet Marketing Website Marketing Internet Promotion Internet Marketing India Website Marketing India Internet Promotion India Internet Marketing Consultancy Website Marketing Consulta

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions