Latest Blogs from SBS and Company LLP

    Remittance of Assets Regulations vs Liberalised Remittance Scheme   - A Comparison under FEMA and Income Tax

    A person in India may remit amount to outside India under various situations. In order to regulate such remittances, various regulations have been inserted under Foreign Exchange Management Act, 1999 (‘FEMA’) and Income Tax Act, 1961 (‘ITA’). In this article, the concept of remittance of amount to outside India by Individual has been discussed in detail.

    An Individual may remit amount to outside India for various purposes viz. foreign trip, foreign education, medical facilities, investment in abroad, sale proceeds of investments in India, income earned in India etc.,

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    GAAR vis-à-vis Compromises or Arrangements under Companies Act

    Introduction:

    It is observed from the  recent judgments of National Company Law Tribunals (for brevity ‘NCLT’/’Tribunal’) that there is an ambiguity as to the extent the objections raised by Income Tax Department should be taken into consideration while the Tribunals sanction a scheme under the provisions of Section 230 – 232 of Companies Act (for brevity ‘Companies Act’).

    Section 230(5) of Companies Act for instance stipulates that a notice with all the documents in the prescribed format has to be sent to the Central Government, the income tax authorities, the Reserve Bank of India, the Securities and Exchange Board of India, the Registrar of Companies, the respective stock exchanges, the official liquidator, the competition commission, if necessary, and such other sector regulators or authorities which are likely to be affected by the compromise or arrangement and shall require the representations to be made on the proposed scheme.

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    Management Support Services vis-à-vis Intra Group Services  –	An Analysis under Transfer Pricing - Part III

    Introduction:

    In previous parts of Article (Part I[1] and Part II[2]), the concept of taxability of management support services under treaty and Income Tax Act (‘IT Act’) has been analysed in detail. Previous Parts of Article deal with taxability of such services in India in the hands of recipient.

    However, the issue may not be said completely analyzed, without analyzing the deductibility of such expenses in the hands of the payer from the standpoint of transfer pricing.

    Let us proceed to continue with the same example considered in the previous parts.

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    Striking Down of Circular on Taxability of Annuities – HAM Projects – Karnataka High Court in DPJ Bidar – Chincoholi & Others  - Circular 150/06/2021

    In our earlier article[1], we have discussed the issue on taxability of annuities received in a Hybrid Annuity Model. This is the update to the earlier article after the recent judgment of Honourable Karnataka High Court in the matter of DPJ Bidar – Chincholi (Annuity) Road Project Private Limited has quashed the impugned circular which tried to levy the tax on annuity payments. In this article, we deal with the issue involved and the analyse the judgment of High Court.

    Introduction:

    The construction of road is quintessentially a primary infrastructure and boost to the national infrastructure. The construction of road and maintenance thereof, is one of the important factors to boost the national income and economic productivity. The taxation of construction of road under the service tax regime was completely exempted from tax. Though, there was a lot of confusion on the taxation of maintenance of roads under the service tax regime, the ambiguity was put into rest by creating a specific entry for exemption. This was a huge relief to the sector and the service providers, considering the huge stakes of demands.

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    SBS Wiki E Journal August 2022

    In this 97h edition, we bring you articles on interesting overlapping issues and other items. The article on ‘Remittance of Assets vs LRS – Comparative Study under FEMA and IT’ deals about various issues that we face on day to day from our NRI and resident clients. The recent introduction of TCS on LRS has created an additional layer of complexity for the residents transferring money using the LRS route. Also, there are certain stark differences between the remittance of asset regulations and LRS both under FEMA and IT Act. Hence, we thought to contribute an article around those aspects with FAQs.

    The next article is on the recent Karnataka High Court judgment wherein the Circular 150 under GST laws was struck down. The Circular tried to tax the annuities received by concessionaire naming them as deferred payments for construction and those are not the payments which were referred to Entry 23A of Notification No 12/2017 – CT (R). However, the High Court stated that a circular cannot override the Entry in the notification and accordingly struck down the Circular. The High Court stated that there is nothing in law which prohibits the executive to collect tax on the annuity payment aka deferred payments for construction but that should be stipulated in the law. Though the judgment is favourable to the concessionaries, how the GST Council sees this and try to restrict the benefit of Entry 23A to annuity payments aka deferred payments for construction must be observed in days to come. The ideology behind Entry 23A was to grant exemption for annuities which are paid instead of toll. However, the said intention seems to be put on the back burner by the GST Council after 43rd GST Council meeting which was evident from the issuance of Circular 150. Interestingly, without waiting for the above judgment or contesting before any Courts, the NHAI started sending letters to concessionaries stating that they will the pay the tax on the annuities which were earlier stated by NHAI as exempted at the time of bidding.

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