Latest Blogs from SBS and Company LLP

    The Story of Most Favored Interpretation of MFN Clause in Treaties

    Introduction

    This article aims at understanding the concept of Most Favored Nation (‘MFN’) clause in the Double Taxation Avoidance Agreement (‘DTAA’ or ‘Treaty’) between India and other countries, issues and controversies therein.

    A country enters into treaty with other country for various purposes, the main object of which is for elimination of double taxation by way of sharing/forgiving taxation rights in respect of income earned by assessee.

    As there is a requirement to share/forgive taxation rights by two countries, treaty may be concluded on different terms with different countries. In order to protect the interest of the countries for sharing taxation right, some countries may insert MFN clause in the treaty between them.

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    Succession by Female – Prior to Hindu Succession Act – SC answers in Aurnachala Gounder

    The recent decision of Honourable Supreme Court in matter of Aurnachala Gounder v. Ponnusamy[1] has reiterated the rights of a female for succeeding to the property in absence of a male issue, though the succession happened prior to the enactment of Hindu Succession Act, 1956. The matter revolves around, who would be the successor to the self-acquired of the father who has only a daughter or brother’s son. The trail court and high court have held that the property would devolve by survivorship instead of succession. Since the father does not have any male issue and the daughter has deceased without any issue, the property would devolve by survivorship on the son of deceased brother. The next question that has come up is, if the property is to be devolved by succession to the daughter, how would the succession happen post her demise. The Supreme Court after referring to the various commentaries and judicial precedents has held that the self-acquired property would devolve on the daughter through succession and not to brother’s son by survivorship, despite of the fact that the succession happened prior to the enactment of Hindu Succession Act. In this article, we shall analyse the fact, the observations of trail and high court and the ultimate ruling by the Supreme Court.    

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    Ambit of ‘Agreeing to Obligation to Refrain from Act or Tolerate an Act or To Do an Act’ – Part I

    When the positive list of taxation under service tax laws was done away with the introduction of negative list, a new concept of ‘declared services’ was introduced with effective from 01 July 12. Declared services are list of activities or transactions, which were specifically covered under the definition of ‘service’ under the pre-GST[1] laws to clear away the ambiguity, if any, and to drive home the point that such activities or transactions are also services. When the negative list was phased out with the advent of GST laws, majority of the entries of declared services were carried and incorporated into GST laws vide Schedule II of CT Act[2].  

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    SBS Wiki E Journal February 2022

    In this edition, we bring you, an article on the understanding of the depth of the most litigative entry in the indirect taxation sphere, which is agreeing to the obligation to refrain from an act or tolerate an act or to do an act. Though we understand that we have only touched the tip of iceberg, we have made an honest attempt in understanding the direction in which it would be interpreted. The article comes in two-part series, the one dealing with the position under the European VAT and the next dealing with position under Indian scenario.

    The next article is on the interpretation of ‘Most Favoured Nation’ clause in the tax treaties. The Courts have shown a direction as to how the same has to be interpreted specifically in the context of interpretation of treaties in light of Vienna Convention of Law of Treaties. However, the Board’s Circular has attempted to override the judgments and gave a new interpretation to their favour. Though the said circular is binding only on the revenue and not on the courts or assessee, it would be an unwanted fight of the taxpayer with the revenue. We have covered the exact issue with our remarks.

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    Various Issues under Section 50 – Capital Gains – Depreciable Capital Asset

    In this article, we shall discuss various issues under section 50 of Income Tax Act, 1961 (‘ITA’) which deals with computation of gain arising from the transfer of depreciable capital asset.

    Introduction:

    Section 50 of ITA states that when there is a transfer of capital asset which forms part of block of assets in respect of which depreciation has been allowed, gain or loss arising from transfer of such depreciable capital asset shall be treated as gain or loss arising from transfer of short-term capital asset.

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