India: Unused foreign tax credit; “fees for technical services” under Singapore tax treaty

Final rules, withdrawal of retroactive application of “indirect transfer” related provisions

Final rules, withdrawal of retroactive application of indirect transfer related provisions

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

  • Unused foreign tax credit as business expenditure: The Hyderabad Bench of the Income-tax Appellate Tribunal held that foreign taxes against which credit is not allowable under section 91(1) of the Income-tax Act, 1961 are not deductible as a business expenditure under section 37(1). The case is: Infor (India) Private Ltd. Read an October 2021 report [PDF 336 KB]
  • Management support services as “fees for technical services” under income tax treaty with Singapore: The Delhi Bench of the Income-tax Appellate Tribunal held that amounts received from management support services with regard to hotel management operations are not taxable as fees for technical services under the income tax treaty between India and Singapore because such services do not make available technical knowledge, experience, skill, know-how or processes, etc. The case is: Inter-Continental Hotels Group (Asia Pacific) Pte. Ltd. Read an October 2021 report [PDF 348 KB]
  • Final rules, withdrawal of retroactive application of “indirect transfer” related provisions:  The Central Board of Direct Taxes (CBDT) issued final rules for withdrawing the retroactive application of “indirect transfer” related provisions. The rules are effective from 1 October 2021. Once certain conditions are met, the pending income-tax proceedings would be withdrawn; the demand for tax would be nullified; and the amount, if any, collected would be refunded to the taxpayer without any interest. Read an October 2021 report [PDF 328 KB]
  • Depreciation and written-down value: The Pune Bench of the Income-tax Appellate Tribunal addressed eligibility for depreciation on the “written-down value” of a block of machinery at the gross value without reduction for a loan waiver. The tribunal held that the waiver of loan in the earlier year had no effect either on the actual cost of assets under section 43(1) or the written-down value under section 43(6) of the Income-tax Act, 1961. Accordingly, depreciation was allowable on the written-down value of the block of machinery at the gross value without reduction for the loan waiver. The case is: Shapers India Private Ltd. Read an October 2021 report [PDF 350 KB]

 

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