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  • Service: Tax, International Corporate Tax, Mergers & Acquisitions, International Executive Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/3/2012

India - Protocol not retroactive, unabsorbed depreciation, online advertisement 

August 3:   The KPMG member firm in India has prepared reports on the following developments (read these July and August 2012 reports, by clicking on the hyperlinks provided below):
  • Because protocol to tax treaty does not apply retroactively, a statutory limit on expenses related to the taxpayer’s head office does not apply: The Mumbai Bench of the Income -tax Appellate Tribunal held that changes made by a Protocol to the India-UAE income tax treaty do not apply retroactively. Accordingly, expenses relating to the taxpayer’s head office cannot be denied for a period prior to the Protocol’s amendment.

    The case is: Abu Dhabi Commercial Bank Ltd. Read an August 2012 report [PDF 211 KB]


  • Unabsorbed depreciation is added to “written down value” of asset acquired in amalgamation: The Madras High Court held that concerning the “written down value” of a block of assets in the hands of the amalgamated (merged) company, unabsorbed depreciation is to be added to the “written down value” of the asset acquired in amalgamation.

    The case is: EID Parry (India) Ltd. Read an August 2012 report [PDF 201 KB]


  • Payment for online banner advertisement on foreign company’s portal is not taxable as “fees for technical services” or royalty: The Mumbai Bench of the Income-tax Appellate Tribunal held that a payment made to a foreign company for the services rendered in uploading and displaying a banner advertisement on its portal was not in the nature of fees for technical services or royalty. Rather, the payment was in the nature of business income and, absent a permanent establishment in India, is not taxable income in India.

    The case is: Pinstorm Technologies Pvt. Ltd. Read an August 2012 report [PDF 194 KB]


  • Timelines for filing return for the Tax Year 2011-12 extended for specified taxpayers: India’s Central Board of Direct Taxes (CBDT) announced an extended deadline for filing the tax returns that were due 31 July 2012 in respect of Financial Year (FY) 2011-12 for certain taxpayers (e.g., non-company taxpayers and taxpayers who are not required to have their books of accounts audited such as individuals, Hindu Undivided Family [HUF], Trusts, etc). The extended due date for these taxpayers is 31 August 2012.

    Read a July 2012 report [PDF 364 KB]


  • Deduction is available to the undertaking: The Chandigarh Bench of the Income-tax Appellate Tribunal held that a taxpayer’s “taking over” of the business of two partnerships is not a “reconstruction of business” because the undertaking’s business continued; thus, the taxpayer is entitled those deduction benefits for the unexpired period as would have been allowable to the undertaking.

    The case is: Spray Engineering Devices Ltd. Read a July 2012 report [PDF 165 KB]


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