Monthly Archives: March 2014

  • Corporate Guarantee extended to a Foreign Associated Enterprise (AE) – Whether a International Transaction and subject to Indian Transfer Pricing Law?

    March 20 2014

    By virtue of Finance Act, 2012 the definition of the term International Transaction was clarified to have a wider scope to cover capital financing transactions. In view of the same it is debated as to whether a corporate guarantee by an Indian parent to its foreign subsidiary falls within the ambit of the definition of International Transaction and consequently is subjected to Indian Transfer Pricing Law???

    Read More
  • Refund of Unutilized Cenvat Credit for service provider under partial reverse charge under rule 5B of Cenvat Credit Rules, 2004

    March 8 2014

    At the time of introducing the system of partial reverse charge mechanism i.e. 1st July 2012, the cenvat credit rules were also amended and new rule 5B was inserted to provide for the refund of unutilized cenvat credit for the service provider under the partial reverse charge mechanism. Rule 5B provided that the refund of unutilized cenvat credit can be claimed subject to certain procedures. However those procedures were not prescribed. Now CBEC has issued notification 12/2014 dated 3rd March 2014 prescribing the procedure for claiming such refund.

    Read More
  • TDS u/s 195 on payments to Non-Residents on what amount??

    March 8 2014

    On what amount TDS u/s 195 is required to be deducted while making payments to non-residents? Whether on gross amount or on net amount i.e. only on the income element ? In case where TDS has not been deducted what amount should be taken as base by the Income Tax officers for treating the assessee as being in default??? 

    The CBDT has issued Instruction No. 02/2014 dated 26.02.2014 in which it has referred to the judgements of the Supreme Court in Transmission Corp of A. P. 299 ITR 587 and GE India Technology Pvt. Ltd 327 ITR 456 on the issue of deduction of tax at source u/s 195 while making payments to non-residents.

    The CBDT has directed AOs u/s 119 that in a case where the assessee fails to deduct TDS u/s 195, the Income Tax officer cannot treat the whole sum remitted to the non-resident as being chargeable to tax but he has to determine the appropriate proportion of the sum chargeable to tax as mentioned in s. 195(1) for treating the assessee as being in default u/s 201. Such appropriate proportion of the sum would depend on the facts & circumstances of each case i.e. nature of remittance, income component therein etc..

    Read More