Tax Flash News

Anti-fragmentation rule in the definition of permanent establishment not applicable in the absence of any business activity carried on by foreign enterprise in India

RGA International ReInsurance Company Designated Activity Company v. DCIT (ITA No. 1092/Mum/ 2025)

Government approves Employment-linked incentive schemes

Press release issued by the Ministry of Labour and Employment Source- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2141129 - dated 1 July 2025 Accessed on 2 July 2025

Mauritius company not a tax resident of India given its control and management not situated ‘wholly’ in India - Capital gains on share transfer not taxable

Essar Communications Limited v. ACIT (ITA No. 340/ DEL/ 2022); Essar Com Limited v. ACIT (ITA No. 339/ DEL/ 2022)

India Tax Konnect - June 2025

ITA No.2168/Del/2023

Compensation received for diminution in value of stock options is a capital receipt, not taxable

Manjeet Singh Chawla v. DCIT of TDS (Writ Petition No. 20212 of 2023 (T-IT))

Provision of marketing support services does not create permanent establishment unless the prescribed conditions are fulfilled

Zscaler Inc. v. DCIT (ITA No. 3376/DEL/2023; ITA No. 928/DEL/2025)

Conversion of company into LLP is a taxable transfer unless prescribed conditions are satisfied

ISC Specialty Chemicals LLPv. ITO (ITA No. 457/MUM/2025)

Tribunal allowed set-off of PE loss against ECB interest taxable on gross basis

Abu Dhabi Commercial Bank PJSC v. DCIT (International Taxation) (ITA No. 3404/MUM/2023)

Capital gains article under tax treaty allocates taxation right and is not subject to limitation of relief clause

Prashant Kothari v. Income Tax Ward (ITA No. 5391/MUM/2024)

Refund of unutilized input tax credit on closure of business allowed

SICPA India Private Limited and Another [WP (C) No. 54 of 2023]

Option money received for grant of right of first refusal to other shareholder, being advance against sale of shares, is a capital receipt

ACIT v. Dabur Invest Corp. (ITA No. 2453/Del/2022 & ITA No. 2454/Del/2022); Dabur Invest Corp. v. JCIT (ITA No. 2447/Del/2022)

Government of India declares 8.25 per cent interest rate on Employees’ Provident Funds Scheme for Financial Year 2024-25

EPFO Circular Source -https://www.epfindia.gov.in/site_docs/PDFs/Circulars/Y20252026/DeclarationOfROI_2024_25.pdf Accessed on 3 June 2025

India Tax Konnect - May 2025

Due date for filing Income Tax Return extended from 31 July to 15 September

CBDT Circular No. 6 dated 27 May 2025 and Press Release dated 27 May 2025

Proposed Excise Tax on Foreign Remittances from the U.S.

Klaus Vogel on Double Taxation Conventions, 5th edition, Pg. 1959

Capital gains exemption under the India-Cyprus treaty granted in the absence of substantive evidence to rebut it

Gagil FDI Ltd. v. ACIT (ITA No. 2661/Del/2024)

India and UK Sign Free Trade Agreement and Double Contribution Convention, easing dual social security contributions

Government of India

High Court ruling on the cost of asset received by a shareholder upon liquidation

T.R. Balasubramanium v. ACIT(TCA No. 438 of 2008)

Damages received for surrendering a ‘mere right to sue’ is not taxable as capital gains

DCIT v. Ramesh Ravji Chheda (ITA No. 968/Mum/2025); DCIT v. Rasik Kunverji Chheda (ITA No. 1000/Mum/2025); DCIT v. Mahendra Ravji Chheda (ITA No. 1001/Mum/2025);

India Tax Konnect - April 2025

PE loss permissible to be set-off against fees for technical services taxable on gross basis

Hyosung Corporation v. ACIT (ITA No. 2943/Del/2013)

CBDT notified the list of laws for disallowance of settlement payments

Ten goods notified to be liable to tax collection at source

Notification no. 36/2025 dated 22 April 2025

Mutual fund units not equivalent to company shares for capital gains taxation under tax treaty

Anushka Sanjay Shah v. ITO (ITA No. 174/Mum/2025)

Surcharge on private discretionary trusts follows slab-based rates, not the highest rate

Araadhya Jain Trust v. ITO (ITA No. 4272/Mum/2024)

Acquisition of shares at below FMV not taxable as Other Income when held as stock-in-trade

Utility Supply Private Ltd v. DCIT (ITA No. 3585/M/2024)

Capital gains taxable on transfer of undervalued leasehold rights in land based on stamp duty value

Vidarbha Veneera Industries Ltd (In Liquidation) v. ITO (ITA No. 34 of 2022)

The Reserve Bank of India releases revised draft Export & Import regulations and directions under FEMA, 1999 for public comments

RBI Press Release dated 2 July 2024

US Reciprocal Tariff – To deliver balance of trade

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India Tax Konnect - March 2025

ESM Group Inc. v. DCIT (ITA No. 9365/Del/2019)

Revision to the direct tax amendments proposed by the Union Budget 2025

KPMG Flash News on India Union Budget 2025-26

Rights entitlements are not akin to shares

Vanguard Emerging Markets Stock Index Fund A Series of VISPLC v. ACIT (ITA No. 4657/Mum/2023)

CBDT Circular on application of PPT vis-à-vis grandfathering provisions in treaty does not affect other anti-abuse provisions

CBDT Circular no. 1 dated 21 January 2025

High Court upheld the CBDT order rejecting relaxation of conditions to carry forward losses

W.P.(C) 399/2022

Charges for bareboat chartering is not taxable as royalty under the India-Belgium tax treaty

Baggerwerken Decloedt En Zoon v. DCIT (IT(TP) No. 69/Chny/2019)

Limitation period prescribed by a CBDT circular is unsustainable when none existed in the Act

Central Board of Direct Taxes

India Tax Konnect - February 2025

Indian subsidiary installing the equipment supplied by the parent under separate contract does not constitute permanent establishment

CIT v. Nokia Network OY (ITA No. 785/2019)

The Division Bench of Karnataka High Court dismisses revenue appeal on non-taxability of the salary reimbursement for the seconded employees

WA No. 992 of 2023

The Income-tax Bill, 2025, tabled in the Parliament

While the 1961 Act has sections numbered till 298, it contains a lot of alpha-numerical provisions, for instance Section 115A 115WM. Hence, the total individual section count is more than 800 in order to do a like-to-like comparison with the Bill

Special Bench ruled on limitations on deductibility of head office expenses under the Act vis-à-vis the treaty

Mashreq Bank PSC v. DCIT (ITA No.1342/Mum/2006)

India Union Budget 2025-26

Economic survey 2024-25, Ministry of Finance, Accessed on 31 January 2025

India Tax Konnect - January 2025

Grandfathered (exempt) capital gains need not be set off against non-grandfathered losses

After setting off a part of losses with the current year's taxable gains

Grandfathering provision under the tax treaty is outside the purview of the Principal Purpose Test: CBDT circular

CBDT Circular no. 1 dated 21 January 2025

SNRR account can be opened with authorised dealers in India or its branches outside India

Notification No. FEMA 5(R)(5)/2025-RB. issued by RESERVE BANK OF INDIA (Foreign Exchange Department) on 14 January 2025

Exporters permitted to open and hold a Foreign Currency Account with a bank outside India

Notification No. FEMA 10(R)(5)/2025-RB) issued by RESERVE BANK OF INDIA (Foreign Exchange Depar on 14 January 2025

Capital reduction results in transfer of a capital asset

PCIT v. Jupiter Capital Pvt Ltd (SLP No. 63 of 2025)