International Taxation: The Indian Perspective

117 Pages·2020·1.246 MB·English

by  Nigam Nuggehalli

SPRINGER BRIEFS IN LAW
Nigam Nuggehalli
International
Taxation
The Indian
Perspective
SpringerBriefs in Law
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Nigam Nuggehalli
International Taxation
The Indian Perspective
123
NigamNuggehalli
Schoolof Law, BMLMunjal University
Gurugram, India
ISSN 2192-855X ISSN 2192-8568 (electronic)
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Table of Cases
1. ADIT v E Funds IT Solutions Inc., (2018) 13 SCC 294.
2. AbdullabhaiAbdulKadarv.CommissionerofIncome-taxBombayCity(1952
22 I.T.R. 241) 1952 Indlaw MUM 2.
3. Alembic Chemical Works Co. Ltd. v. Commissioner of Income Tax, Gujarat
(1989) 177 ITR 377, 1989 Indlaw SC 559.
4. Asia Satellite Telecommunications Co. Ltd. v. DIT, 2011 SCC OnLine Del
507.
5. Assistant Commissioner of Income Tax vs. M/S Celerity Power LLP,
MANU/IU/1165/2018.
6. Banca Sella S.P.A, (2016-LL-0817-75)
7. Barclays Mercantile Business Finance Limited v Mawson, [2004] UKHL 51,
[2005] 1 AC 684.
8. CIT v. B.C. Srinivasa Setty, (1981) 2 SCC 460.
9. CIT v Divine Leasing and Finance, 299 ITR 268 (2007).
10. CIT v. Gautum Sarabhai Trust, 1988 SCC OnLine Guj 156.
11. CIT v. Grace Collis (Mrs.) and Others, (2001) 3 SCC 430.
12. CIT v Stellar Investments 192 ITR 287 (2007).
13. Centrica India Offshore Pvt Ltd v. CIT, (2014) 364 ITR 336.
14. Commissioner of Income Tax, Bangalore vs. B.C. Srinivasa Setty, 1981
AIR SC 972.
15. Commissioner of Income-Tax vs Davy Ashmore India Ltd., 190 ITR 626.
16. Commissioner of Income Tax, Punjab v. R.D. Aggarwal & Co., 1964
Indlaw SC 254.
17. Commissioner of Income Tax v Samsung Electronics Co Ltd., 2011 SCC
OnLine Kar 3973.
18. Comptroller of Income Tax v AQQ and another appeal, [2014] SGCA 15.
19. DDIT, International Taxation v Set Satellite (Singapore) (Pte.) Ltd.,
MANU/IU/5227/2007.
20. DDIT v Unocol Bharat, MANU/ID/0899/2018.
v
vi TableofCases
21. DIC Asia Pacific Pte Ltd. v ADIT, [2012] 18 ITR (Trib) 358 (Kolkata).
22. DIT (Mumbai) v. Morgan Stanley, 2007 TII 1 SC (TP).
23. Deputy Commissioner of Income Tax (International Taxation) v. Welspun
Corporation Limited, 2017 SCC OnLine ITAT 334.
24. Director of Income Tax vs. Infrasoft Ltd., 2013 SCC OnLine Del 4694.
25. Dresdner Bank v ACIT, (2006) 105 TTJ Mum 149.
26. Formula One World Championship Ltd. v CIT, International Taxation, (2017)
15 SCC 602.
27. Furniss v Dawson, [1984] A.C. 474.
28. GE India Technology Centre (P) Ltd. vs CIT [2010] 327 ITR 456 (SC).
29. HMRC v Tower M Cashback
30. Helvering v Gregory, 69 F 2nd 809 (1934).
31. Honda Siel Cars India Limited v Commissioner of Income Tax, Ghaziabad
2017 Indlaw SC 432.
32. IRC v. Duke of Westminster, [1936] AC 1 (HL).
33. Ishikawajma-Harima Heavy Industries Ltd. vs Director Of Income Tax,
Mumbai, (2007) 3 SCC 481.
34. Income Tax Officer, TDS v Nokia India Pvt Ltd., 2015 SCC OnLine ITAT
9865.
35. Jindal Thermal Power Company Ltd. vs DCIT, 321 ITR 31.
36. Joseph Fowler v MNR, 1990 (2) CTC 2351.
37. Kikabai Premchand v CIT, 1953 Indlaw SC 77.
38. M/s Google India Private Ltd. vs. Addl. Commissioner of Income-tax, 2017
SCC OnLine ITAT 78.
39. Maruti Suzuki India Limited vs. CIT, 2015 SCC OnLine Del 13940.
40. Mc Dowell & Company Ltd. v The Commercial Tax Officer, [1985] 3 SCR
791.
41. McGuckian [1997] 1 WLR 991
42. M/s L.G. Electronics India Private Limited vs. Assistant Commissioner of
Income Tax, MANU/ID/0036/2013.
43. OrchidPharmaLimitedvDeputyCommissionerofIncomeTax,Chennai,2016
SCC OnLine ITAT 12571.
44. Raheja IT Park v CIT, 2014 11 TMI 349.
45. Ramsay v. IRC, [1982] AC 300 (HL).
46. Saroj Kumar v. I.T. Commissioner, AIR 1959 SC 1252.
47. SET Satellite v DDIT, 307 ITR 205 (2008).
48. Subhash Kabini Power v CIT, 2015 (1) TMI 646.
49. Sumitomo Mitsui Banking v DDIT, 2012 Indlaw ITAT 16.
50. Tata Consultancy Services v State of Andhra Pradesh, 271 ITR 401.
51. Union of India v. Azadi Bachao Andolan, 2003 Indlaw SC 823.
52. Union of India v Vodafone Group PLC United Kingdom and Anr, 2017 SCC
OnLine Del 9930.
TableofCases vii
53. VodafoneInternational Holdings B.V.v. Union ofIndia and Anr., [2012] 1 S.
C.R. 573.
54. W.T. Ramsay Ltd. v. IRC, [1982] A.C. 300 (H.L.).
55. Wipro Ltd v DCIT, 2015 Indlaw KAR 9678.
Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2 Overview of Indian Legislation Regarding International
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3 Contracts, Status and the Judiciary . . . . . . . . . . . . . . . . . . . . . . . . . 17
The English Judiciary and Tax Planning . . . . . . . . . . . . . . . . . . . . . . . 17
The Indian Judiciary and Tax Planning . . . . . . . . . . . . . . . . . . . . . . . . 23
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4 Permanent Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Business Connection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
‘Business Connection’ Post-amendment . . . . . . . . . . . . . . . . . . . . . . . . 31
Taxability of Business Profits as per DTAAs: Understanding
‘Permanent Establishments’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Fixed PE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Service PE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Dependent Agent PE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Stewardship v. Deputation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
‘Nature of Business’ and ‘Control’ Test. . . . . . . . . . . . . . . . . . . . . . . . 38
Attribution of Profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5 Royalty and Fees for Technical Services. . . . . . . . . . . . . . . . . . . . . . 47
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Royalty-Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Royalties and the Transfer of Software. . . . . . . . . . . . . . . . . . . . . . . 50
ix
x Contents
Retrospective Amendments to the Statutory Definition of Royalty. . . . . 55
Fees for Technical Services-Definitional Provisions . . . . . . . . . . . . . . . 59
6 Capital Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7 Transfer Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
8 General Anti-avoidance Rules (GAAR). . . . . . . . . . . . . . . . . . . . . . . 83
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
The GAAR Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
GAAR and International Contractual Arrangements . . . . . . . . . . . . . . . 90
GAAR: A Comparative View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
9 BEPS, The Principal Purpose Clause and Indian Taxation . . . . . . . 95
BEPS: Overview and Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
The Principal Purpose Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
BEPS Action Plan 6 and the PP Clause . . . . . . . . . . . . . . . . . . . . . . 100
The PP Clause and the Interpretation of Tax Statutes . . . . . . . . . . . . 101
Conclusion: The PPT Rule and GAAR: A Superfluous Solution
to a Problem of Statutory Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 105
Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Conclusion.... .... .... .... ..... .... .... .... .... .... ..... .... 109