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Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 2/20/2013

India - Capital gains, IT-services under treaties with France, Australia 

February 20:   The KPMG member firm in India has prepared reports on the following developments (read the February 2013 reports by clicking on the hyperlinks provided below):
  • “Hypothetical tax” allowed as an income tax deduction: The Mumbai Bench of the Income-tax Appellate Tribunal affirmed that the amount of “hypothetical tax” withheld from an employee’s salary in the home country is deductible from the income subject to tax in India. Thus, Indian income tax, paid by the employer, after taking into account the hypothetical tax withheld from the employee’s salary may be considered taxable in India.

    Read the February 2013 report [PDF 195 KB]


  • Capital gains on transfer of shares of French company that held controlling interest in Indian company is taxable in France, not in India: The Andhra Pradesh High Court held that a “special purpose” investment company is an independent corporate entity, and was not required to “lift the corporate veil” and pay tax on capital gains in the hands of investment company’s shareholders. Rather, capital gains arising from transfer of shares of a French sub-holding company were taxable in France under provisions of the India-France income tax treaty.

    The case is: Sanofi Pasteur Holding SA. Read a February 2013 report [PDF 230 KB]


  • Subsequent advance ruling in third-party case does not supersede advance ruling obtained by the taxpayer: The Bombay High Court held that a subsequent advance ruling in a third-party case does not override the advance ruling obtained by taxpayer. Therefore, reopening of assessment was not justified because the Authority for Advance Ruling’s finding in the taxpayer’s matter continued to govern the taxpayer’s assessment.

    The case is: Prudential Assurance Company Ltd. Read a February 2013 report [PDF 192 KB]


  • IT support does not “make available” technical know-how, and not fees for technical services under India-Australia income tax treaty: The Pune Bench of the Income-tax Appellate Tribunal held that IT support services rendered by the taxpayer to its Indian affiliate did not “make available” technical know-how. Therefore, the payment received for rendering such services was not taxable as fees for technical services under the India-Australia income tax treaty.

    The case is: Sandvik Australia Pty. Ltd. Read a February 2013 report [PDF 201 KB]


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1801 K Street NW
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