Tuesday, November 18, 2014


May 27

Calling it a tax on foreign direct investment, Shell India moved the Bombay High Court in April last year. The court rejected the tax department’s argument that the Shell case was distinguishable from Vodafone’s case, which won a similar reprieve in October.

“The Shell India case is significant. It follows the earlier Vodafone judgment — the principle being that issuance of shares by an Indian company to its foreign parent is not exigible to transfer-pricing provisions, as there is no income arising therefrom,” said Mukesh Butani, managing partner of BMR Legal, which represented Shell India.

The Bombay High Court judges, M S Sanklecha and S C Gupte, set aside the tax department’s order over jurisdiction and did not get into the valuation of the shares.

 May '15

India, Japan to resolve transfer pricing disputes

Half the 30 such cases, worth Rs 10,000 crore, to be addressed

A mixed bag of IMPONDERABLES ?!

According to sources privy to the matter, after MAPs with Japan, the Central Board of Direct Taxes (CBDT) plans to sign such agreements with European nations such as the UK and France, too.

"Trade and industrial relations between India and Japan are continuously improving. After the introduction of the new rollback rules, new MAPs and bilateral advance pricing agreements could be signed. These agreements will further aid in improving business relations," said S P Singh, senior director, Deloitte Haskins & Sells.

"Some feel besides signing MAPs and advance pricing agreements (APAs), the government should form a policy that prevents tax controversies from arising." Many multinational corporations sign APAs to avoid litigation while doing business in India. In 2012, 146 applications were filed, followed by 232 the next year.

Sporadic (common sense rooted thoughts):

 "Some feel besides signing MAPs and advance pricing agreements (APAs), the government should form a policy that prevents tax controversies from arising."

For this purpose, in order to try and have a 'long lasting' solution, 'the government' , even upfront, need to identify the most specific areas giving rise to major tax disputes of otherwise avoidable vexing type  ; mainly, those which, in the ultimate analysis, are experienced to have come to be degraded increasingly in recent times , from a 'battle of wits', to the level of a  'battle of wits or non-wits against wits or non-wits', so to say. And , for obvious reasons, that should not but be done through a mutual agreement or reconciliation process- that is, in consultation and co-ordination with, and taking the other countries into full confidence.

For instance, one such area of vexing inconclusive disputes, leading to , never a -win - win but - a lose-lose situation for both sides, hence requiring the maximum conscious focus on, briefly stated, are the kind of disputes traceable to the domestic law provisions woven around/built upon the obnoxious concepts such as, - 'deemed', 'substance not form', etc.    

Most certainly, the legal pundits within and without the government are expected to know and equipped more on the above indicated predicaments,  and, if so concur, take as far as feasible the comparatively convenient direction /  route from all angles, to the benefit of own and the contracting states as well. 

Nov 23

Govt to revisit tax treaties to unearth black money: FM

Jaitley also clarifies that PAN details will have to be given for investing more than Rs 50,000 in Kisan Vik

Jaitley said he had recently sent a delegation to and the members had returned with some positive movement. "We have to furnish evidence that is independent of the HSBC list. I cannot go to them (foreign countries) and have them saying they would not cooperate because the is a stolen one... I have to present to them some independent evidence on names that are also present on the stolen list," he said, referring to the discussions with the Swiss government.
Asked if this was not provided in the current bilateral treaties, the minister said: "This is what we have discussed. Cooperation is rapidly increasing. Now, if you see the US laws, they want more countries to accept the law that provides for automatic exchange of information."

<> Questions raised , so also the answers elicited / offered gravely offend anyone's common sense; of course, all the more so, the 'legal' sense  of anyone endowed even with an iota of idea or knowledge of what all the answers bear out, in terms of 'realty' or real life situations overwhelmingly obtaining in the related sphere.  In short, both (questions and answers) pathetically excel each other in hollowness/ are lacking in clarity !

Whither the ways and means to lead to / result eventually in any solution worth a mention, in the foreseeable future; remains, as ever hitherto, a multi crore top QUESTION !

Nov 21

The G20 leaders gave their assent to the proposal put forth by the Organisation for Economic Co-operation and Development to limit the use of tax havens, as cleared by OECD Finance Ministers earlier.
Read more »

< ...While allowing public access to information on beneficial ownership is still not part of the agenda, a readiness to track such data is a modest beginning. The G20 leaders gave their assent to the proposal put forth by the Organization for Economic Co-operation and Development to limit the use of tax havens, as cleared by OECD Finance Ministers earlier. By contrast, the target of a 2 per cent increase in overall output growth for the bloc within the next four years with a promise to further liberalize trade, is perhaps more of an expression of pious intent. The risk of another global recession, even if not of a magnitude similar to the earlier one, is a refrain that is not infrequently heard these days.>


Good work on advance pricing

Improvements to tax policy also needed

< Unfortunately, minimizing disputes has not been high on the list of priorities of the Indian revenue office for some time. This has led to a slew of major transfer-pricing disputes. In many of these cases, there may well have been some sharp practices by multinationals. But the sheer number and scale of the tax demands by Indian authorities have effectively turned off foreign direct investors and given India the reputation of being an unnecessarily risky destination in terms of taxation. The government has rightly chosen to address this issue. Finance Minister Arun Jaitley, in his Budget speech earlier this year, had specified that a series of global best practices in determining transfer-pricing taxes would be introduced. It appears that when Prime Minister visited Japan, the final details were hammered out as to how these APAs will work. Altogether, it is an excellent signal that the government is working to repair India's reputation as an investment destination. Other signals of tax reform have also been coming in - for example, the finance ministry has not so far moved to appeal an adverse judicial decision on its transfer-pricing dispute with (this is distinct from the well-known tax dispute with Vodafone over the tax assessed after it purchased its assets in India from Hutch).>

The highlighted portion bears on its sleeves the obvious misconception / confusion in the mind of the writer. For, the point of issue in fact was pivoted on the basic question as to whether or not the impugned transaction was, both factually and in the eyes of law, one of transfer of 'share holding' , more so indirectly and abroad, in, OR as fought for by the Revenue,  'assets' of, the Indian entity.

Any possible contra reaction from experts at large?  

Cross Refer     

Posted: 18 Nov 2014 07:20 PM PST
Dr. Suresh Surana Comment on Shell’s wins of transfer pricing tax dispute in Bombay HC The aggressive approach of tax authorities and the earlier government in case of Vodafone and Shell led to...

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