Jurisprudentiol– Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Customs

Exemption to Goods required for setting up of Mega Power Project - captive coal mine, dedicated coal transportation facility, dedicated water intake and pumping system, not eligible; dedicated power evacuation system eligible - AAR

THE electricity generated will not and cannot be stored from its generation till the point of interconnection to the transmission network of Power Grid Corporation or any other transmission company and that it is technically impossible to store electricity after generation. In view of this factual position, which is not in dispute, it is clear that power evacuation system must be legitimately treated as a part of the inter-state power plant.

Income Tax

Assessee is a foreign bank - runs NRI desk at overseas branches - claims deduction of expenses - Sec 44 C has no application to such expenses; assessee violates Security Contracts Act - sets off losses against gains - since losses emanate from illegal transactions entered into books, they are allowable deduction: ITAT

CLAIMING deduction for expenses incurred for overseas branches of an Indian tax resident is a tricky business. What makes it particularly complicated is the general nature of the services offered. Like in this case the assessee is a bank and runs NRI desk at its various branches in different country. The fact that other Asians also avail services of such a desk, should Revenue allow deduction of expenses u/s 37. Is Sec 44C related to 'Head Office Expenses' applicable in such a case? Having examined the nature of business and the lack of evidence supporting the arguments of the Revenue, the Tribunal has held that since the expenses were wholly and exclusively incurred for the business purposes of the Indian business of the bank, Sec 44C will have no applicability to such a situation. Mere book entries are not very important for determining the correctly assessed income of the assessee. The claim can be made through 'computation of income' route as well.

Indo-German DTAA - assessee earns royalty and fee for technical services from own subsidiaries in India - merely because subsidiaries conduct business with guidance of non-resident, it does not mean that foreign co can be deemed to have a PE in form of own subsidiaries; A non-resident Co having a PE in India by itself does not lead to taxability: ITAT

IN the domain of international taxation, the concept of PE relishes a prime position. A PE owes its existence to a compromise between the residence rule and source rule of taxation. It constitutes the happy abode for the foreign enterprise abroad. The nucleus of PE in the source country consists of a fixed place of business of foreign enterprise and its business activities. In a situation like this case, if a foreign enterprise does not have a PE in the source jurisdiction but does have a subsidiary, can its subsidiary be treated as a PE?

See our columns Tomorrow for the judgements