Latest Expert Exchange Queries
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) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: empanelment :: list of goods taxed at 4% :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: VAT RATES :: due date for vat payment :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TDS :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4%
 
 
Direct Tax »
 Hopeful of meeting direct tax collection target for this financial year: CBDT
 Bengaluru tops in income tax probes after demonetisation
 Income Tax department rejects black money disclosures of over Rs 2 lakh crore
 CBDT urges people to protect bank accounts from 'unscrupulous elements'
 No change in gold seizure norms in proposed I-T Law amendments
 Direct tax collection will get a long-term boost, Franklin Templeton says
 I-T Act amendments upset calculations of cash hoarders
 Claim tax benefit on costs incurred to evict tenants
 The Integrated Goods And Services Tax Act, 2016
 Here’s what Income Tax Department did leading up to demonetisation
 I-T department asks IDS declarants to pay tax by November 30

CBDT implements Voda ruling in like cases
January, 31st 2015

The Central Board of Direct Taxes (CBDT) asked its field formations on Thursday to not treat income arising out of a share transfer by Indian subsidiaries of multinational companies (MNCs) to its parent and other related entities as taxable.

It, thus, extended the principle of law laid down by the high court at Mumbai in the Vodafone case to all like cases. This would give relief to those involving Shell, IBM, Cairn and Essar, among others.

On Wednesday, the Union Cabinet had decided not to go for an appeal against the HC order in the Rs 3,200-crore tax dispute. It had said it would accept rulings of courts, appellate tribunals and dispute resolution panels in this regard in similar cases.

“I am directed to draw your attention to the decision of the high court...wherein (it held) the premium on share issue was on account of capital account transaction and does not give rise to income and, hence, not liable to transfer pricing adjustment,” said undersecretary Anchal Khandelwal in an instruction to transfer pricing (TP) officials. The instruction said the Board had accepted the decision and the principle would apply to all similar cases.

The ruling was on October 10, 2014. “In our opinion, there is no taxable income on share premium received on the issue of shares,” the judges said.

The department had asked the company to pay additional income tax, alleging it had undervalued its shares in subsidiary Vodafone India Services, while transferring these to the parent company in Britain.

The transaction related to the assessment year 2009-10. TP refers to transaction prices between separate entities of an MNC. The issue was that Vodafone India, a wholly owned subsidiary of Mauritian entity Vodafone Tele-Services (India) Holdings (Vodafone Mauritius), issued 289,224 equity shares of a face value of Rs 10 each at a premium of Rs 8,591 a share in August 2008 to Vodafone Mauritius.

The same HC had ruled in favour of the Indian arm of oil and gas company Royal Dutch Shell in November 2014 in a TP dispute with the department, in a case related to a share sale to its foreign parent in 2009.

S P Singh, partner in Deloitte Haskin & Sells, said: “This is a very welcome move and gives a clear guideline to authorities while approaching such cases.”

However, he said, share transfers were a small fraction of cases stuck in a TP dispute. “To get a better impact, the department should come out with such clarifications involving mark-up and safe harbour laws, among other issues,” he said.

On the sidelines of a function earlier on Thursday, minister of state for finance Jayant Sinha said TP litigation involving MNCs had to be looked at separately and individually. “You cannot generalise in that regard. Every case has to be handled on its merits,” Sinha told reporters.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Portfolio

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