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India: Losses from trading in shares; interest on funds provided subsidiaries

India: Losses from trading in shares

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

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  • Input tax credit for GST purposes, construction services: The Orissa High Court allowed an input tax credit on inputs and input services used for construction of a shopping mall—credits that could be applied against the goods and services tax (GST) amount payable on rent income receivable from tenants of the shopping mall. Read a May 2019 report [PDF 674 KB]
  • GST on real estate—FAQs: India’s Central Board of Indirect Taxes and Customs released updates to a list of “frequently asked questions” (FAQs) for the real estate sector. Read a May 2019 report [PDF 613 KB]
  • Business loss from trading in shares not allowed as setoff against profits: The Supreme Court of India held that losses arising from the taxpayer’s activity of trading in shares (a loss arising from the business of speculation) could not be set off against profits that the taxpayer realized in its business activities involving futures and options because this income was not the profit and gain of a “speculative business.” The case is: Snowtex Investment Ltd. Read a May 2019 report [PDF 811 KB]
  • Scientific research expenditure, eligibility for weighted deduction: The Madras High Court allowed the weighted deduction under section 35(2AB) of the Income-tax Act, 1961 for a scientific research expenditure relating to the period prior to the approval granted by the appropriate authority. The High Court observed that the taxpayer was not to be penalized for a “bureaucratic delay” in giving such approval for the year in question and that for the prior and following years, the approval was “on the record” with the tax department. Therefore, the tax department could not deny the weighted deduction for the expenditure incurred on the scientific research. The case is: TVS Electronics Ltd. Read a May 2019 report [PDF 722 KB]
  • Allowability of interest on funds provided subsidiaries: The Supreme Court of India upheld a High Court decision concerning whether interest on funds provided to subsidiaries would be allowable as a deduction when such interest would not have been payable to banks.  The case is: CIT v. Reliance Industries Ltd. Read a May 2019 report [PDF 734 KB] 

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