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TDS Guidelines
TDS
CA. Kavit Vijay

Guidelines issued for TDS on payment by e-commerce operator

Finance Act, 2020 requires e-commerce operators to deduct TDS @ 1% on transactions made through e-commerce platforms. E-commerce operators are required to make such deduction at the time of credit of such amount to the account of e-commerce participant or at the time of payment, whichever is earlier.  The Central Board of Direct Taxes has earlier issued Guidelines for deduction of TDS under section 194-O(4) vide Circular no.17 of 2020 dated 29th September, 2020 and vide Circular No. 20 of 2021 dated 25th November, 2021. 

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Safe Harbour Rules
Information
CA. Kavit Vijay

Amendment in Safe Harbour Rules under Income Tax Act

“Safe Harbour” means circumstances under which Income-tax authorities shall accept the transfer price declared by the assessee himself. Thus, ‘safe harbour rules’ specifies the various circumstances under which transfer price declared by the Assessee with respect to International transactions shall be accepted by Income tax authorities. Safe Harbour rule is given under Rule TD of Income Tax Rules, 1961.

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Domain Registration
Information
CA. Kavit Vijay

Fees received for registration of domain name of customers can’t be considered as Royalty

The Appellant is engaged in providing domain name registration service, website design and web hosting. The Appellant charges a fee for facilitating domain name registration and a part of such fees is kept by the Appellant and a portion is shared with ICANN and the registry. Ld. The Assessing Officer considered such a fee as royalty and issued a demand order accordingly. View of Ld. AO is upheld by DRP and Tribunal. The Appellant contented that the domain name is not owned by the Appellant. Rather, the same is owned by the customer itself. The Appellant is only an intermediary and only renders registration services. The Appellant does not have any right in the property or trademark in the domain name. There is a difference between domain name registration and Trademark. The services offered by the Appellant are similar to those provided by other professionals to their respective clients who seek registration of a company’s name with the RoC or registration of patents and trademarks with the concerned registrars appointed under the relevant statute.

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ITR processing
ITR
CA. Kavit Vijay

Processing of ITR Filed electronically with refund claim under section 143(1) beyond the prescribed limit in non- Scrutiny cases

After filing of Income tax return, processing of Income tax return under section 143(1) is the first step wherein return is electronically processed by the Department system and action is taken as per the prima facie validations such as TDS is granted as per information available in Form 26AS irrespective of amount claimed in ITR, computation of interest etc. Refund claimed in Income tax return is processed only after processing under Section 143(1) of Income Tax Act.

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Permanent Establishment
Income tax Assessments
CA. Kapil Mittal

Mere establishment of Subsidiary in India does not tantamount to Having Permanent Establishment in India

The Assessee is a company based out in Austria. The Assessee is having a Subsidiary Company in India. The Appellant has received software-related services income during the year. Apart, The Company also received reimbursement of expenses from Indian Subsidiary. However, the Company claimed the same as exempted Income as expenses are recovered on cost to cost basis without any markup. Further, the Company also supplied goods to Indian Entities on a principal to principal basis. The Ld. AO Charged Income tax on reimbursement of expense claiming that such income pertains to technical income provided to Indian subsidiary. Further, AO assumed that entire sales in India are made through Indian Subsidiaries. The Asseesee has a fixed place of business in India in the form of Indian Subsidiary. The ‘core business’ of the assessee is conducted through Mosdofer India Private Limited. Therefore, profit attributable to such PE is taxable in India.

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Dividend Income
Income Tax
CA. Kavit Vijay

Companies are entitled to claim credit of Tax payable in Thailand on Dividend Income even if no taxes are paid

The Assessee earned dividend income from its subsidiary company based in Thailand. Assessee was liable to pay Income Tax @ 10% on such dividend income in Thailand. However, tax was exempted due to the statutory regime obtained in Thailand. While filing ITR in India, Assessee disclosed such income and claimed the credit of tax @ 10% which was payable in Thailand but not paid due to exemptions. 

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