In this 99^th edition, we bring you articles covering the recent pronouncement of Supreme Court in Ganapati Dealcom, where in it was held that the benami transaction (prohibition) act is applicable prospectively and not retrospectively. This is a landmark judgment, since it puts rest to all the proceedings initiated before the enactment of amendment act in 2016.

The next article is on the issues that would arise under GST laws when a partner retires from the firm by taking the exact amount that was lying to credit of his capital and current account and in instances where he takes more than that. Though the said issues were covered by the new sections in the income tax act, the position under GST laws is unclear as of now. Hence, there is a requirement for the Central Government to formulate provisions or give clear instructions before the litigation crops up.  

The next article is on the determination of date for issuance of notice under income tax act for the purposes of Section 148. The Delhi High Court has framed five scenarios under which the date of issue of notice needs to be determined. Though it is held that such notices are to be treated as issued after 1^st April 2021, being time barred for carrying the assessment/re-assessment, the same is saved by the Supreme Court’s judgment in Ashish Agarwal, wherein it was held that such notices to be treated as valid. However, the Delhi High Court’s judgement will be pretty useful for future issues.

I hope that you will have good time reading this edition and please do share your feedback. I will also urge clients to mail us topics or issues on which you want us to deliberate in our future editions, so that we can contribute to the same.

Key Topics:

GST

• RETIRING PARTNER AND PARTNERSHIP FIRM – CERTAIN GST ISSUES

DIRECT TAX

• PROHIBITION OF BENAMI TRANSACTIONS ACT – APPLIES PROSPECTIVELY – SC IN GANPATI DEALCOM
• DETERMINATION OF DATE OF ISSUE VIS-A-VIS VARIOUS MODES OF ISSUE OF NOTICE

Under the pre-amended/old regulations, overseas investment, in respect of investment in foreign securities, is governed by Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 and, overseas investment, in respect of investment in immovable property, is governed the Foreign Exchange management (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015.

Government of India, in order to improve its standards in ease of doing business by way of relaxations, simplifications or exemptions, is making many changes to various laws and regulations which inter alia includes changes to taxation laws, Foreign Exchange Management Regulations, Corporate and other laws etc.

Read more: A Discussion on New Overseas Investment Regulations

Introduction:

In first two parts of Article (Part I[1] and Part II[2]), the concept of taxability of management support services (‘MSS’) under treaty and Income Tax Act (‘IT Act’) has been analysed in detail.

Further, through the third part, consequences of such transaction under transfer pricing provisions have been discussed.

In part III[3], it is concluded that payment to non-resident associate enterprise in relation to management support services as intra group services. Now, in this part, let us proceed to analyse determination of remuneration for those services under Arm’s Length Principle.

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

Read more: Management Support Services vis-à-vis Arm’s Length Price - An Analysis under Transfer Pricing –...

The Supreme Court in the recent matter of Quick Heal Technologies Limited[1] has rejected the tax authorities claim of service tax on the amounts that are collected towards sale of anti-virus software. The Supreme Court followed its previous decision of Tata Consultancy Services[2] in reaching the above conclusion. In this article, we deal with the approach adopted by Supreme Court in arriving at the conclusion.

Issue:

The assessee (Quick Heal Technologies Limited) was engaged in development of anti-virus software under the brand of ‘Quick Heal’. The same is supplied along with the license code/product code either online or on the replicated CDs/DVDs to the end-customers in India. The tax authorities has demanded service tax on such sale of anti-virus software for the period 01.03.2011 to 31.03.2014 (covering both the positive and negative list regime). The main contention of the tax authorities to demand the service tax is that the assessee, apart from the sale of the above software in canned form, also provides periodical electronic updates and such provision of periodical electronic updates to the software already sold is subjected to service tax.

Read more: No Service Tax Only on Reason Updates are Provided – Supreme Court in Quick Heal Technologies...