India: Write-off of foreign subsidiary investments; withholding tax rate under tax treaty with Switzerland

The KPMG member firm in India has prepared reports about recent tax developments

The KPMG member firm in India has prepared reports about recent tax developments

The KPMG member firm in India has prepared reports about the following tax developments (read more at the hyperlinks provided below).

  • Write-off of investment in loss-making foreign subsidiaries: The Mumbai Bench of the Income-tax Appellate Tribunal held that a write-off of investments in loss-making foreign subsidiaries is allowed as a business loss because the investments were made out of commercial expediency and in furtherance of the taxpayer’s business. The tribunal noted that the investments had a direct nexus with the taxpayer’s business, and any loss arising therefrom was an allowable deduction. The case is: Maneesh Pharmaceuticals Ltd. Read a June 2021 report [PDF 324 KB]
  • Cyprus listed as country eligible for Category I foreign portfolio investor license: The Ministry of Finance issued an order (14 June 2021) amending the “SEBI (Foreign Portfolio Investors) Regulations, 2019” to add Cyprus so that funds are eligible for Category I foreign portfolio investor registration under the SEBI regulations. Read a June 2021 report [PDF 528 KB]
  • “Faceless appeal centre” bound by decision of the High Court: The Agra Bench of the Income-tax Appellate Tribunal held that the National Faceless Appeal Centre (NFAC) is bound by a decision of the High Court with jurisdiction over the Assessing Officer. The case is: Mahadev Cold Storage. Read a June 2021 report [PDF 535 KB]
  • Tax to be withheld at concessional rate under India-Switzerland income tax treaty: The Delhi High Court determined that under the “most favored nation” clause of the India-Switzerland income tax treaty, a lower withholding tax rate of 5% on dividends applies with regard to the taxpayer in this case. The case is: Nestle SA. Read a June 2021 report [PDF 535 KB]

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