Global

Details

  • Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 12/4/2012

India - Non-compete fees as allowable expense; equity valuation rules 

December 4:   The KPMG member firm in India has prepared reports on the following developments (read the November and December 2012 reports by clicking on the hyperlinks provided below):
  • Non-compete fees paid to run the business effectively are allowed as revenue expenditure: The Mumbai Bench of the Income-tax Appellate Tribunal held that non-compete fees paid to “ward off” a potential threat to the taxpayer’s business did not result in any additional profit-making asset or capital outlay. Further, the non-compete fee agreement was entered separately from the share-purchase agreement. Thus, the tribunal concluded the non-compete fee was an eligible revenue expenditure because it allowed management to run its business effectively.

    The case is Intervet (India) Ltd. Read the November 2012 report [PDF 214 KB]


  • Valuation methods for determining fair market value of “unquoted equity shares” under section 56(2)(viib): The Central Board of Direct Taxes issued Notification No. 52/2012 (29 November 2012) amending rules 11 and 11UA of the Income-tax Rules, 1962. These changes set forth specific valuation principles with respect to unquoted equity shares (pursuant to section 56(2)(viib) of the Income-tax Act).

    Read the December 2012 report [PDF 187 KB]



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