In a significant judgment that can have far-reaching ramifications concerning interpretation of Double Taxation Avoidance Agreements (DTAA), the Supreme Court of India, in a group of matters titled as Assessing Officer Circle (International Taxation) vs. M/s Nestle SA, 2023 INSC 928 [Civil Appeal No(s).
Amit Ganatra is an Executive Director in the Direct Tax practice group. With two decades of professional experience, Amit has advised clients in the areas of corporate and international taxation including bilateral tax treaties and related issues. His areas of expertise include tax advisory, litigation, compliance, EPC Contracts, tax structuring (including under IBC) and group reorganizations.
In an important income-tax related development, the Central Board of Direct Taxes (CBDT) has issued a notification (Notification) to amend Rule 11UA of the Income-tax Rules, 1962, which prescribes the manner of computing the fair market value (FMV) of shares, in relation to inter alia ‘Angel Tax’ [income-tax levied on excess share premium (i.e.
Akshika Harikrishnan is a Director in the Direct Tax and Private Client practice. Prior to joining the Firm, Akshika was a director in family office, M&A and PE tax at KPMG.
As per Indian tax laws (“ITL”), any ‘excess premium’ received by an Indian closely held company (“ICo”) upon allotment of shares (equity or preference shares) to resident or non-resident investors (unless exempted) is taxed as ordinary income of ICo (“Angel Tax Provision”). The ‘excess premium’ will be the difference between the consideration received by the ICo for share issuance and the prescribed fair market value of such shares (Tax FMV).
In a first ruling on the issue, the Income Tax Appellate Tribunal, Mumbai (Tribunal) in the case of Legatum Ventures Limited (Taxpayer) [ITA No. 1627/2022], ruled that capital gains on sale of unlisted shares by a non-resident must be computed strictly as per Section 112(1)(c)(iii) of the Income Tax Act, 1961 (ITA) without considering the computation provisions under Section 48 of ITA.
The Hon’ble SC reversed the Karnataka HC judgment on the issue of comparables selection and whether it constitutes a 'substantial question of law'.
The Hyderabad Bench of the Income Tax Appellate Tribunal (Tribunal) recently ruled that “colourable” devices adopted to take undue benefit of law should be looked through to determine the real nature of the transaction and accordingly denied exemption from tax under Section 54F of the Income-tax Act, 1961 (IT Act).
