India: Set-off of loss against foreign dividend income; revaluation of partnership assets taxable; fixed and agency PE

Reports about recent tax developments

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).

  • Set-off of loss and deduction under Section 80G against foreign dividend income: The Mumbai Bench of the Income-tax Appellate Tribunal held that the taxpayer is entitled to set-off of current and prior year losses against foreign dividend income which is taxed at a concessionary 15% rate. Further, the taxpayer was eligible for deduction under Section 80G. The court determined that the starting point of the applicability of Section 115BBD is the determination of “total income.” Only after the determination of total income is the remaining foreign dividend income included in total income and subject to tax at the rate of 15%. The case is: Tata Industries Ltd. Read a December 2022 report [PDF 410 KB]

  • Revaluation of assets credited to a partner’s account is taxable as capital gains: The Supreme Court held that the revaluation of assets credited to the capital accounts of partners resulted in taxable capital gain from the transfer of a capital asset at the partnership level. The court found that the credit of the assets’ revaluation amount to the capital accounts of the partners is, in effect, a distribution of the assets to the partners. The case is: Mansukh Dyeing and Printing Mills. Read a December 2022 report [PDF 421 KB]

  • Singaporean subsidiary of an Indian company has a fixed and agency permanent establishment (PE) in India: The Chennai Bench of the Income-tax Appellate Tribunal held that the Singaporean subsidiary company of an Indian company had a fixed place PE in India since the premises of its Indian holding company were at the disposal of the Singaporean company. Further, the services rendered by the Indian holding company for the Singaporean Company were neither preparatory nor auxiliary services but main functions of group business. The Singaporean company also had an agency PE in India since the Indian holding company acted as an agent of such Singaporean company for Indian customers. Further, the Indian holding company had the authority to conclude contracts and such authority had habitually concluded contracts on behalf of the Singaporean company. The case is: Redington Distribution Pte. Ltd. Read a December 2022 report [PDF 411 KB]


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