Direct Tax

The Madras High Court (Court) recently ruled in favour of the Taxpayer (M/s WABCO India Limited v. The Deputy Commissioner of Income-tax, W.A.No. 884 of 2018 and C.M.P Nos. 8825 and 7726 of 2018.) holding that the Taxpayer could not be taxed in India when it had no role to play in a share transfer that took place outside India

Recently, the Central Board of Direct Taxes (CBDT) vide circular (Circular) dated 11 July 2018 (please access our newsflash on this Circular by clicking here had revised the monetary thresholds of the ‘tax effect’ on matters, below which an appeal should not be filed by the Income-tax Department (Tax Department) with certain exceptions carved out in Paragraph 10 (Para 10) of the Circular.

In a move that is intended to enhance the ease of doing business, reduce low value litigations, and also help the Income-tax department (Department) focus on high value litigations, on 11 July 2018, the Ministry of Finance released a circular (Circular) enhancing the monetary thresholds of the tax effect on matters below which an appeal (Appeal) cannot be filed by the Department.

In the recent case of Commissioner v Mahindra and Mahindra Limited (Judgment)[Civil Appeal Nos. 6949-6950 of 2004], a division bench of the Supreme Court of India (SC) has ruled that waiver of principal portion of loan (which was taken for capital account transaction) by a creditor is not taxable in borrower’s hands under section 28(iv) or section 41(1) of the Income-tax Act 1961 (Act)

Recently, the Chennai Bench of the Income Tax Appellate Tribunal (Tribunal) in the case of M/s Nissan Motor India Pvt Ltd vs DCIT [ITA No. 1854/CHNY/2017], ruled in favour of the taxpayer and held that payment to offshore sister concerns, in the nature of reimbursement of warranty expenses, is not taxable in India, as the source of such income is not in India. Hence, the payer is not required to withhold tax at the time of such payment.