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How to Face CA Exams

September 15, 2018 CA Ankit Gulgulia (Jain) 0

How to Face CA Exams Cover Page of Book ICAI has Recently Released it’s Publication “How to Face CA Exams”. Click Here to Download its Copy. […]

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DVAT :- Form 9 Due Date Extended to 28th November, 2014 GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI DEPARTMENT OF TRADE AND TAXES (POLICY BRANCH) VYAPAR BHAWAN, I.P.ESTATE, NEW DELHI-110 002 No.F.7(420)/VAT/Policy/2011/PF/391-397 Dated: 26/09/14 CIRCULAR NO. 13 of 2014-15 Sub: Filing of reconciliation return for the year 2013-14. In exercise of the powers conferred under Rule 49A of the Delhi Value Added Tax Rules, 2005 read with section 9(2) of Central Sales Tax Act, 1956, I, Sanjeev Khirwar, Commissioner, Value Added Tax, do hereby extend the last date of filing of online return in Form 9 for the year 2013-14, prescribed under Rule 4 of Central Sales Tax (Delhi) Rules, 2005 to 28th November, 2014. The return is to be filed by dealers who have made interstate sale at concessional rates against statutory forms ‘C’ or stock transferred against ‘F’ forms or sold the goods against ‘H’ forms to dealers (other than Delhi) or claimed deduction from taxable turnover against E-I/EII forms or I/J forms etc. The dealers who have not made the sale as mentioned above need not file reconciliation return in Form 9. (Sanjeev Khirwar) Commissioner,Value Added Tax No.F.7(420)/VAT/Policy/2011/PF /391-397 Dated: 26/09/14 Related Tags Circulars, DVAT, Form 9, Indirect Taxes 70 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS GST Annual Return (GSTR-9) – Format And Instructions To Fill Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GPS Tracking Of Transporters Under GST – UP Issues Notification Law Commission Proposes Abolishing HUF ! DELHI VAT – AREA WISE WARD LIST GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? Click Here SEARCH CHARTERED ONLINE CUSTOM SEARCH RSS Twitter Facebook Google+ CONTACT PRIVACY POLICY SITEMAP DISCLAIMERABOUT USSUBMIT YOUR ARTICLE © 2017 Charteredonline. The content is copyrighted to this site and may not be reproduced on other websites. ↑ BESbswyBESbswyBESbswy

September 13, 2018 CA Ankit Gulgulia (Jain) 0

GOVERNMENT OF NATIONAL CAPITAL TERRITORY OF DELHI DEPARTMENT OF TRADE AND TAXES (POLICY BRANCH) VYAPAR BHAWAN, I.P.ESTATE, NEW DELHI-110 002 No.F.7(420)/VAT/Policy/2011/PF/391-397 Dated: 26/09/14 CIRCULAR NO. […]

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Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company. Section 6(3) of the Income-tax Act, 1961, prior to its amendment by the Finance Act, 2015, provided that a company is said to be resident in India in any previous year, if it is an Indian company or if during that year, the control and management of its affairs is situated wholly in India. This allowed tax avoidance opportunities for companies to artificially escape the residential status under these provisions by shifting insignificant or isolated events related with control and management outside India. To address these concerns, the existing provisions of section 6(3) of the Income-tax Act, 1961 were amended vide Finance Act, 2015, with effect from 1st April, 2016 to provide that a company is said to be resident in India in any previous year, if- (i) it is an Indian company; or (ii) its place of effective management in that year is in India . 2. For the purposes of this clause, “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made. 3. ‘Place of effective management’ (PoEM) is an internationally recognised test for determination of residence of a company incorporated in a foreign jurisdiction. Most of the tax treaties entered into by India recognize the concept of ‘place of effective management’ for determination of residence of a company as a tie-breaker rule for avoidance of double taxation. 4. The Explanatory Memorandum to the Finance Bill, 2015 has stated that a set of guiding principles to be followed in the determination of PoEM would be issued for the benefit of the taxpayers as well as the tax administration. Accordingly the guiding principles on the following lines are proposed to be issued. 5. For the purposes of these guidelines, – (a) A company shall be said to be engaged in “active business outside India” if the passive income is not more than 50% of its total income and (i) less than 50% of its total assets are situated in India; and (ii) less than 50% of total number of employees are situated in India or are resident in India; and (iii) the payroll expenses incurred on such employees is less than 50% of its total payroll expenditure ; (b) “Head Office” of a company would bethe place where the company’s senior management and their direct support staff are located or, if they are located at more than one location, the place where they are primarily or predominantly located. A company’s head office is not necessarily the same as the place where the majority of its employees work or where its board typically meets; (c) “ Passive income”of a company shall be aggregate of ,- (i) incomefrom the transactions where both the purchase and sale of goods is from / to its associated enterprises; and (ii) income by way of royalty, dividend, capital gains, interest or rental income; (d) “Senior Management” in respect of a company means the person or persons who are generally responsible for developing and formulating key strategies and policies for the company and for ensuring or overseeing the execution and implementation of those strategies on a regular and on-going basis. While designation may vary, these persons may include: (i) Managing Director or Chief Executive Officer; (ii) Financial Director or Chief Financial Officer; (iii) Chief Operating Officer; and (iv) The heads of various divisions or departments (for example, Chief Information or Technology Officer, Director for Sales or Marketing). 6. Any determination of the PoEM will depend upon the facts and circumstances of a given case. The PoEM concept is one of substance over form. It may be noted that an entity may have more than one place of management, but it can have only one place of effective management at any point of time. Since “residence” is to be determined for each year, POEM will also be required to be determined on year to year basis. The process of determination of POEM would be primarily based on the fact as to whether or not the company is engaged in active business outside India. 7. The place of effective management in case of a company engaged in active business outside India shall be presumed to be outside India ifthe majority meetings of the board of directors of the company are held outside India. 7.1 However, if on the basis of facts and circumstances it is established that the Board of directors of the company are standing aside and not exercising their powers of management and such powers are being exercised by either the holding company or any other person (s) resident in India, then the place of effective management shall be considered to be in India. 7.2 For the purpose of determining whether the company is engaged in active business outside India the average of the data of the previous year and two years prior to that shall be taken into account. In case the company has been in existence for a shorter period, then data of such period shall be considered. 8. In cases of companies other than those that are engaged in active business outside India referred to in para 7 the determination of POEM would be a two stage process , namely:- (i) . First stage would be identification or ascertaining the person or persons who actually make the key management and commercial decision for conduct of the company’s business as a whole. (ii) Second stage would be determination of place where these decisions are in fact being made. 8.1 The place where these management decisions are taken would be more important than the place where such decisions are implemented. For the purpose of determination of POEM it is the substance which would be conclusive rather than the form. 8.2 Some of the guiding principles which may be taken into account for determining the PoEM are as follows: (a) The location where a company’s board regularly meets and makes decisions may be the company’s place of effective management provided, the Board- (i) retains and exercises its authority to govern the company; and (ii) does, in substance, make the key management and commercial decisions necessary for the conduct of the company’s business as a whole. It may be mentioned that mere formal holding of board meetings at a place would by itself not be conclusive for determination of POEM being located at that place. If the key decisions by the directors are in fact being taken in a place other than the place where the formal meetings are held then such other place would be relevant for POEM. As an example this may be the case where the board meetings are held in a location distinct from the place where head office of the company is located or such location is unconnected with the place where the predominant activity of the company is being carried out. If a board has de facto delegated the authority to make the key management and commercial decisions for the company to the senior management or any other person including a shareholder and does nothing more than routinely ratifying the decisions that have been made, the company’s place of effective management will ordinarily be the place where these senior managersor the other person make those decisions. (b) A company’s board may delegate some or all of its authority to one or more committees such as an executive committee consisting of key members of senior management. In these situations, the location where the members of the executive committee are based and where that committee develops and formulates the key strategies and policies for mere formal approval by the full board will often be considered to be the company’s place of effective management. The delegation of authority may be either de jure (by means of a formal resolution or Shareholder Agreement) or de facto (based upon the actual conduct of the board and the executive committee). (c) The location of a company’s head office will be a very important factor in the determination of the company’s place of effective management because it often represents the place where key company decisions are made.The following points need to be considered for determining the location of the head office of the company:- • If the company’s senior management and their support staff are based in a single location and that location is held out to the public as the company’s principal place of business or headquarters then that location is the place where head office is located. • If the company is more decentralized (for example where various members of senior management may operate, from time to time, at offices located in the various countries)then the company’s head office would be the location where these senior managers,- (i) are primarily or predominantly based; or (ii) normally return to following travel to other locations; or (ii) meet when formulating or deciding key strategies and policies for the company as a whole. • Members of the senior management may operate from different locations on a more or less permanent basis and the members may participate in various meetings via telephone or video conferencing rather than by being physically present at meetings in a particular location. In such situation the head office would normally be the location, if any, where the highest level of management (for example, the Managing Director and Financial Director) and their direct support staff are located. • In situations where the senior management is so decentralised that it is not possible to determine the company’s head office with a reasonable degree of certainty, the location of a company’s head office would not be of much relevance in determining that company’s place of effective management. (d) It may be clarified that day to day routine operational decisions undertaken by junior and middle management shall not be relevant for the purpose of determination of POEM. (e) The use of modern technology impacts the place of effective management in many ways. It is no longer necessary for the persons taking decision to be physically present at a particular location. Therefore physical location of board meeting or executive committee meeting or meeting of senior management may not be where the key decisions are in substance being made. In such cases the place where the directors or the persons taking the decisions or majority of them usually reside may also be a relevant factor. (f) If the above factors do not lead to clear identification of POEM then the following secondary factors can be considered :- (i) Place where main and substantial activity of the company is carried out; or (ii) Place where the accounting records of the company are kept. 9. It needs to be emphasized that the determination of PoEMis to be based on all relevant facts related to the management and control of the company, and is not to be determined on the basis of isolated facts that by itself do not establish effective management, as illustrated by the following examples: i. The fact that a foreign company is completely owned by an Indian company will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. ii. The fact that one or some of the Directors of a foreign company reside in India will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. iii. The fact of , local management being situated in India in respect of activities carried out by a foreign company in India will not , by itself, be conclusive evidence that the conditions for establishing PoEM have been satisfied. iv. The existence in India of support functions that are preparatory and auxiliary in character will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. 10. It is reiterated that the above principles for determining the PoEM are for guidance only. No single principle will be decisive in itself. The above principles are not to be seen with reference to any particular moment in time rather activities performed over a period of time, during the previous year, need to be considered. In other words a “snapshot” approach is not to be adopted. Further, based on the facts and circumstances if it is determined that during the previous year the PoEM is in India and also outside India then PoEM shall be presumed to be in India if it has been mainly /predominantly in India 11. Further, in case the Assessing officer proposes to hold a company incorporated outside India, on the basis of its PoEM, as being resident in India then any such finding shall be given by the Assessing officer after seeking prior approval of the Principal Commissioner or the Commissioner, as the case may be, in this regard. The Principal Commissioner or the Commissioner shall provide an opportunity of being heard to the company before deciding the matter. 12. The comments and suggestion of stakeholders and general public on the above draft guidance are invited. The comments and suggestions may be submitted by 02nd January, 2016 at the email address (dirtpl1@nic.in) or by post at the following address with “Comments on draft Guidance on POEM” written on the envelop. Director (Tax Policy & Legislation)-I Central Board of Direct Taxes, Room No. 147-D, North Block, New Delhi – 110001 F. No. 142/11/2015-TPL | CBDT | Notification | 23.12.2015 Related Tags CBDT, Notifications, POEM 4 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? Click Here SEARCH CHARTERED ONLINE CUSTOM SEARCH RSS Twitter Facebook Google+ CONTACT PRIVACY POLICY SITEMAP DISCLAIMERABOUT USSUBMIT YOUR ARTICLE © 2017 Charteredonline. The content is copyrighted to this site and may not be reproduced on other websites. ↑ Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company. Section 6(3) of the Income-tax Act, 1961, prior to its amendment by the Finance Act, 2015, provided that a company is said to be resident in India in any previous year, if it is an Indian company or if during that year, the control and management of its affairs is situated wholly in India. This allowed tax avoidance opportunities for companies to artificially escape the residential status under these provisions by shifting insignificant or isolated events related with control and management outside India. To address these concerns, the existing provisions of section 6(3) of the Income-tax Act, 1961 were amended vide Finance Act, 2015, with effect from 1st April, 2016 to provide that a company is said to be resident in India in any previous year, if- (i) it is an Indian company; or (ii) its place of effective management in that year is in India . 2. For the purposes of this clause, “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made. 3. ‘Place of effective management’ (PoEM) is an internationally recognised test for determination of residence of a company incorporated in a foreign jurisdiction. Most of the tax treaties entered into by India recognize the concept of ‘place of effective management’ for determination of residence of a company as a tie-breaker rule for avoidance of double taxation. 4. The Explanatory Memorandum to the Finance Bill, 2015 has stated that a set of guiding principles to be followed in the determination of PoEM would be issued for the benefit of the taxpayers as well as the tax administration. Accordingly the guiding principles on the following lines are proposed to be issued. 5. For the purposes of these guidelines, – (a) A company shall be said to be engaged in “active business outside India” if the passive income is not more than 50% of its total income and (i) less than 50% of its total assets are situated in India; and (ii) less than 50% of total number of employees are situated in India or are resident in India; and (iii) the payroll expenses incurred on such employees is less than 50% of its total payroll expenditure ; (b) “Head Office” of a company would bethe place where the company’s senior management and their direct support staff are located or, if they are located at more than one location, the place where they are primarily or predominantly located. A company’s head office is not necessarily the same as the place where the majority of its employees work or where its board typically meets; (c) “ Passive income”of a company shall be aggregate of ,- (i) incomefrom the transactions where both the purchase and sale of goods is from / to its associated enterprises; and (ii) income by way of royalty, dividend, capital gains, interest or rental income; (d) “Senior Management” in respect of a company means the person or persons who are generally responsible for developing and formulating key strategies and policies for the company and for ensuring or overseeing the execution and implementation of those strategies on a regular and on-going basis. While designation may vary, these persons may include: (i) Managing Director or Chief Executive Officer; (ii) Financial Director or Chief Financial Officer; (iii) Chief Operating Officer; and (iv) The heads of various divisions or departments (for example, Chief Information or Technology Officer, Director for Sales or Marketing). 6. Any determination of the PoEM will depend upon the facts and circumstances of a given case. The PoEM concept is one of substance over form. It may be noted that an entity may have more than one place of management, but it can have only one place of effective management at any point of time. Since “residence” is to be determined for each year, POEM will also be required to be determined on year to year basis. The process of determination of POEM would be primarily based on the fact as to whether or not the company is engaged in active business outside India. 7. The place of effective management in case of a company engaged in active business outside India shall be presumed to be outside India ifthe majority meetings of the board of directors of the company are held outside India. 7.1 However, if on the basis of facts and circumstances it is established that the Board of directors of the company are standing aside and not exercising their powers of management and such powers are being exercised by either the holding company or any other person (s) resident in India, then the place of effective management shall be considered to be in India. 7.2 For the purpose of determining whether the company is engaged in active business outside India the average of the data of the previous year and two years prior to that shall be taken into account. In case the company has been in existence for a shorter period, then data of such period shall be considered. 8. In cases of companies other than those that are engaged in active business outside India referred to in para 7 the determination of POEM would be a two stage process , namely:- (i) . First stage would be identification or ascertaining the person or persons who actually make the key management and commercial decision for conduct of the company’s business as a whole. (ii) Second stage would be determination of place where these decisions are in fact being made. 8.1 The place where these management decisions are taken would be more important than the place where such decisions are implemented. For the purpose of determination of POEM it is the substance which would be conclusive rather than the form. 8.2 Some of the guiding principles which may be taken into account for determining the PoEM are as follows: (a) The location where a company’s board regularly meets and makes decisions may be the company’s place of effective management provided, the Board- (i) retains and exercises its authority to govern the company; and (ii) does, in substance, make the key management and commercial decisions necessary for the conduct of the company’s business as a whole. It may be mentioned that mere formal holding of board meetings at a place would by itself not be conclusive for determination of POEM being located at that place. If the key decisions by the directors are in fact being taken in a place other than the place where the formal meetings are held then such other place would be relevant for POEM. As an example this may be the case where the board meetings are held in a location distinct from the place where head office of the company is located or such location is unconnected with the place where the predominant activity of the company is being carried out. If a board has de facto delegated the authority to make the key management and commercial decisions for the company to the senior management or any other person including a shareholder and does nothing more than routinely ratifying the decisions that have been made, the company’s place of effective management will ordinarily be the place where these senior managersor the other person make those decisions. (b) A company’s board may delegate some or all of its authority to one or more committees such as an executive committee consisting of key members of senior management. In these situations, the location where the members of the executive committee are based and where that committee develops and formulates the key strategies and policies for mere formal approval by the full board will often be considered to be the company’s place of effective management. The delegation of authority may be either de jure (by means of a formal resolution or Shareholder Agreement) or de facto (based upon the actual conduct of the board and the executive committee). (c) The location of a company’s head office will be a very important factor in the determination of the company’s place of effective management because it often represents the place where key company decisions are made.The following points need to be considered for determining the location of the head office of the company:- • If the company’s senior management and their support staff are based in a single location and that location is held out to the public as the company’s principal place of business or headquarters then that location is the place where head office is located. • If the company is more decentralized (for example where various members of senior management may operate, from time to time, at offices located in the various countries)then the company’s head office would be the location where these senior managers,- (i) are primarily or predominantly based; or (ii) normally return to following travel to other locations; or (ii) meet when formulating or deciding key strategies and policies for the company as a whole. • Members of the senior management may operate from different locations on a more or less permanent basis and the members may participate in various meetings via telephone or video conferencing rather than by being physically present at meetings in a particular location. In such situation the head office would normally be the location, if any, where the highest level of management (for example, the Managing Director and Financial Director) and their direct support staff are located. • In situations where the senior management is so decentralised that it is not possible to determine the company’s head office with a reasonable degree of certainty, the location of a company’s head office would not be of much relevance in determining that company’s place of effective management. (d) It may be clarified that day to day routine operational decisions undertaken by junior and middle management shall not be relevant for the purpose of determination of POEM. (e) The use of modern technology impacts the place of effective management in many ways. It is no longer necessary for the persons taking decision to be physically present at a particular location. Therefore physical location of board meeting or executive committee meeting or meeting of senior management may not be where the key decisions are in substance being made. In such cases the place where the directors or the persons taking the decisions or majority of them usually reside may also be a relevant factor. (f) If the above factors do not lead to clear identification of POEM then the following secondary factors can be considered :- (i) Place where main and substantial activity of the company is carried out; or (ii) Place where the accounting records of the company are kept. 9. It needs to be emphasized that the determination of PoEMis to be based on all relevant facts related to the management and control of the company, and is not to be determined on the basis of isolated facts that by itself do not establish effective management, as illustrated by the following examples: i. The fact that a foreign company is completely owned by an Indian company will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. ii. The fact that one or some of the Directors of a foreign company reside in India will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. iii. The fact of , local management being situated in India in respect of activities carried out by a foreign company in India will not , by itself, be conclusive evidence that the conditions for establishing PoEM have been satisfied. iv. The existence in India of support functions that are preparatory and auxiliary in character will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. 10. It is reiterated that the above principles for determining the PoEM are for guidance only. No single principle will be decisive in itself. The above principles are not to be seen with reference to any particular moment in time rather activities performed over a period of time, during the previous year, need to be considered. In other words a “snapshot” approach is not to be adopted. Further, based on the facts and circumstances if it is determined that during the previous year the PoEM is in India and also outside India then PoEM shall be presumed to be in India if it has been mainly /predominantly in India 11. Further, in case the Assessing officer proposes to hold a company incorporated outside India, on the basis of its PoEM, as being resident in India then any such finding shall be given by the Assessing officer after seeking prior approval of the Principal Commissioner or the Commissioner, as the case may be, in this regard. The Principal Commissioner or the Commissioner shall provide an opportunity of being heard to the company before deciding the matter. 12. The comments and suggestion of stakeholders and general public on the above draft guidance are invited. The comments and suggestions may be submitted by 02nd January, 2016 at the email address (dirtpl1@nic.in) or by post at the following address with “Comments on draft Guidance on POEM” written on the envelop. Director (Tax Policy & Legislation)-I Central Board of Direct Taxes, Room No. 147-D, North Block, New Delhi – 110001 F. No. 142/11/2015-TPL | CBDT | Notification | 23.12.2015 Related Tags CBDT, Notifications, POEM 4 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? Click Here SEARCH CHARTERED ONLINE CUSTOM SEARCH RSS Twitter Facebook Google+ CONTACT PRIVACY POLICY SITEMAP DISCLAIMERABOUT USSUBMIT YOUR ARTICLE © 2017 Charteredonline. The content is copyrighted to this site and may not be reproduced on other websites. ↑ ShareThis Copy and Paste Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company. Section 6(3) of the Income-tax Act, 1961, prior to its amendment by the Finance Act, 2015, provided that a company is said to be resident in India in any previous year, if it is an Indian company or if during that year, the control and management of its affairs is situated wholly in India. This allowed tax avoidance opportunities for companies to artificially escape the residential status under these provisions by shifting insignificant or isolated events related with control and management outside India. To address these concerns, the existing provisions of section 6(3) of the Income-tax Act, 1961 were amended vide Finance Act, 2015, with effect from 1st April, 2016 to provide that a company is said to be resident in India in any previous year, if- (i) it is an Indian company; or (ii) its place of effective management in that year is in India . 2. For the purposes of this clause, “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made. 3. ‘Place of effective management’ (PoEM) is an internationally recognised test for determination of residence of a company incorporated in a foreign jurisdiction. Most of the tax treaties entered into by India recognize the concept of ‘place of effective management’ for determination of residence of a company as a tie-breaker rule for avoidance of double taxation. 4. The Explanatory Memorandum to the Finance Bill, 2015 has stated that a set of guiding principles to be followed in the determination of PoEM would be issued for the benefit of the taxpayers as well as the tax administration. Accordingly the guiding principles on the following lines are proposed to be issued. 5. For the purposes of these guidelines, – (a) A company shall be said to be engaged in “active business outside India” if the passive income is not more than 50% of its total income and (i) less than 50% of its total assets are situated in India; and (ii) less than 50% of total number of employees are situated in India or are resident in India; and (iii) the payroll expenses incurred on such employees is less than 50% of its total payroll expenditure ; (b) “Head Office” of a company would bethe place where the company’s senior management and their direct support staff are located or, if they are located at more than one location, the place where they are primarily or predominantly located. A company’s head office is not necessarily the same as the place where the majority of its employees work or where its board typically meets; (c) “ Passive income”of a company shall be aggregate of ,- (i) incomefrom the transactions where both the purchase and sale of goods is from / to its associated enterprises; and (ii) income by way of royalty, dividend, capital gains, interest or rental income; (d) “Senior Management” in respect of a company means the person or persons who are generally responsible for developing and formulating key strategies and policies for the company and for ensuring or overseeing the execution and implementation of those strategies on a regular and on-going basis. While designation may vary, these persons may include: (i) Managing Director or Chief Executive Officer; (ii) Financial Director or Chief Financial Officer; (iii) Chief Operating Officer; and (iv) The heads of various divisions or departments (for example, Chief Information or Technology Officer, Director for Sales or Marketing). 6. Any determination of the PoEM will depend upon the facts and circumstances of a given case. The PoEM concept is one of substance over form. It may be noted that an entity may have more than one place of management, but it can have only one place of effective management at any point of time. Since “residence” is to be determined for each year, POEM will also be required to be determined on year to year basis. The process of determination of POEM would be primarily based on the fact as to whether or not the company is engaged in active business outside India. 7. The place of effective management in case of a company engaged in active business outside India shall be presumed to be outside India ifthe majority meetings of the board of directors of the company are held outside India. 7.1 However, if on the basis of facts and circumstances it is established that the Board of directors of the company are standing aside and not exercising their powers of management and such powers are being exercised by either the holding company or any other person (s) resident in India, then the place of effective management shall be considered to be in India. 7.2 For the purpose of determining whether the company is engaged in active business outside India the average of the data of the previous year and two years prior to that shall be taken into account. In case the company has been in existence for a shorter period, then data of such period shall be considered. 8. In cases of companies other than those that are engaged in active business outside India referred to in para 7 the determination of POEM would be a two stage process , namely:- (i) . First stage would be identification or ascertaining the person or persons who actually make the key management and commercial decision for conduct of the company’s business as a whole. (ii) Second stage would be determination of place where these decisions are in fact being made. 8.1 The place where these management decisions are taken would be more important than the place where such decisions are implemented. For the purpose of determination of POEM it is the substance which would be conclusive rather than the form. 8.2 Some of the guiding principles which may be taken into account for determining the PoEM are as follows: (a) The location where a company’s board regularly meets and makes decisions may be the company’s place of effective management provided, the Board- (i) retains and exercises its authority to govern the company; and (ii) does, in substance, make the key management and commercial decisions necessary for the conduct of the company’s business as a whole. It may be mentioned that mere formal holding of board meetings at a place would by itself not be conclusive for determination of POEM being located at that place. If the key decisions by the directors are in fact being taken in a place other than the place where the formal meetings are held then such other place would be relevant for POEM. As an example this may be the case where the board meetings are held in a location distinct from the place where head office of the company is located or such location is unconnected with the place where the predominant activity of the company is being carried out. If a board has de facto delegated the authority to make the key management and commercial decisions for the company to the senior management or any other person including a shareholder and does nothing more than routinely ratifying the decisions that have been made, the company’s place of effective management will ordinarily be the place where these senior managersor the other person make those decisions. (b) A company’s board may delegate some or all of its authority to one or more committees such as an executive committee consisting of key members of senior management. In these situations, the location where the members of the executive committee are based and where that committee develops and formulates the key strategies and policies for mere formal approval by the full board will often be considered to be the company’s place of effective management. The delegation of authority may be either de jure (by means of a formal resolution or Shareholder Agreement) or de facto (based upon the actual conduct of the board and the executive committee). (c) The location of a company’s head office will be a very important factor in the determination of the company’s place of effective management because it often represents the place where key company decisions are made.The following points need to be considered for determining the location of the head office of the company:- • If the company’s senior management and their support staff are based in a single location and that location is held out to the public as the company’s principal place of business or headquarters then that location is the place where head office is located. • If the company is more decentralized (for example where various members of senior management may operate, from time to time, at offices located in the various countries)then the company’s head office would be the location where these senior managers,- (i) are primarily or predominantly based; or (ii) normally return to following travel to other locations; or (ii) meet when formulating or deciding key strategies and policies for the company as a whole. • Members of the senior management may operate from different locations on a more or less permanent basis and the members may participate in various meetings via telephone or video conferencing rather than by being physically present at meetings in a particular location. In such situation the head office would normally be the location, if any, where the highest level of management (for example, the Managing Director and Financial Director) and their direct support staff are located. • In situations where the senior management is so decentralised that it is not possible to determine the company’s head office with a reasonable degree of certainty, the location of a company’s head office would not be of much relevance in determining that company’s place of effective management. (d) It may be clarified that day to day routine operational decisions undertaken by junior and middle management shall not be relevant for the purpose of determination of POEM. (e) The use of modern technology impacts the place of effective management in many ways. It is no longer necessary for the persons taking decision to be physically present at a particular location. Therefore physical location of board meeting or executive committee meeting or meeting of senior management may not be where the key decisions are in substance being made. In such cases the place where the directors or the persons taking the decisions or majority of them usually reside may also be a relevant factor. (f) If the above factors do not lead to clear identification of POEM then the following secondary factors can be considered :- (i) Place where main and substantial activity of the company is carried out; or (ii) Place where the accounting records of the company are kept. 9. It needs to be emphasized that the determination of PoEMis to be based on all relevant facts related to the management and control of the company, and is not to be determined on the basis of isolated facts that by itself do not establish effective management, as illustrated by the following examples: i. The fact that a foreign company is completely owned by an Indian company will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. ii. The fact that one or some of the Directors of a foreign company reside in India will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. iii. The fact of , local management being situated in India in respect of activities carried out by a foreign company in India will not , by itself, be conclusive evidence that the conditions for establishing PoEM have been satisfied. iv. The existence in India of support functions that are preparatory and auxiliary in character will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. 10. It is reiterated that the above principles for determining the PoEM are for guidance only. No single principle will be decisive in itself. The above principles are not to be seen with reference to any particular moment in time rather activities performed over a period of time, during the previous year, need to be considered. In other words a “snapshot” approach is not to be adopted. Further, based on the facts and circumstances if it is determined that during the previous year the PoEM is in India and also outside India then PoEM shall be presumed to be in India if it has been mainly /predominantly in India 11. Further, in case the Assessing officer proposes to hold a company incorporated outside India, on the basis of its PoEM, as being resident in India then any such finding shall be given by the Assessing officer after seeking prior approval of the Principal Commissioner or the Commissioner, as the case may be, in this regard. The Principal Commissioner or the Commissioner shall provide an opportunity of being heard to the company before deciding the matter. 12. The comments and suggestion of stakeholders and general public on the above draft guidance are invited. The comments and suggestions may be submitted by 02nd January, 2016 at the email address (dirtpl1@nic.in) or by post at the following address with “Comments on draft Guidance on POEM” written on the envelop. Director (Tax Policy & Legislation)-I Central Board of Direct Taxes, Room No. 147-D, North Block, New Delhi – 110001 F. No. 142/11/2015-TPL | CBDT | Notification | 23.12.2015 Related Tags CBDT, Notifications, POEM 4 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? Click Here SEARCH CHARTERED ONLINE RSS Twitter Facebook Google+ CONTACT PRIVACY POLICY SITEMAP DISCLAIMERABOUT USSUBMIT YOUR ARTICLE © 2017 Charteredonline. The content is copyrighted to this site and may not be reproduced on other websites. ↑ Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company. Section 6(3) of the Income-tax Act, 1961, prior to its amendment by the Finance Act, 2015, provided that a company is said to be resident in India in any previous year, if it is an Indian company or if during that year, the control and management of its affairs is situated wholly in India. This allowed tax avoidance opportunities for companies to artificially escape the residential status under these provisions by shifting insignificant or isolated events related with control and management outside India. To address these concerns, the existing provisions of section 6(3) of the Income-tax Act, 1961 were amended vide Finance Act, 2015, with effect from 1st April, 2016 to provide that a company is said to be resident in India in any previous year, if- (i) it is an Indian company; or (ii) its place of effective management in that year is in India . 2. For the purposes of this clause, “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made. 3. ‘Place of effective management’ (PoEM) is an internationally recognised test for determination of residence of a company incorporated in a foreign jurisdiction. Most of the tax treaties entered into by India recognize the concept of ‘place of effective management’ for determination of residence of a company as a tie-breaker rule for avoidance of double taxation. 4. The Explanatory Memorandum to the Finance Bill, 2015 has stated that a set of guiding principles to be followed in the determination of PoEM would be issued for the benefit of the taxpayers as well as the tax administration. Accordingly the guiding principles on the following lines are proposed to be issued. 5. For the purposes of these guidelines, – (a) A company shall be said to be engaged in “active business outside India” if the passive income is not more than 50% of its total income and (i) less than 50% of its total assets are situated in India; and (ii) less than 50% of total number of employees are situated in India or are resident in India; and (iii) the payroll expenses incurred on such employees is less than 50% of its total payroll expenditure ; (b) “Head Office” of a company would bethe place where the company’s senior management and their direct support staff are located or, if they are located at more than one location, the place where they are primarily or predominantly located. A company’s head office is not necessarily the same as the place where the majority of its employees work or where its board typically meets; (c) “ Passive income”of a company shall be aggregate of ,- (i) incomefrom the transactions where both the purchase and sale of goods is from / to its associated enterprises; and (ii) income by way of royalty, dividend, capital gains, interest or rental income; (d) “Senior Management” in respect of a company means the person or persons who are generally responsible for developing and formulating key strategies and policies for the company and for ensuring or overseeing the execution and implementation of those strategies on a regular and on-going basis. While designation may vary, these persons may include: (i) Managing Director or Chief Executive Officer; (ii) Financial Director or Chief Financial Officer; (iii) Chief Operating Officer; and (iv) The heads of various divisions or departments (for example, Chief Information or Technology Officer, Director for Sales or Marketing). 6. Any determination of the PoEM will depend upon the facts and circumstances of a given case. The PoEM concept is one of substance over form. It may be noted that an entity may have more than one place of management, but it can have only one place of effective management at any point of time. Since “residence” is to be determined for each year, POEM will also be required to be determined on year to year basis. The process of determination of POEM would be primarily based on the fact as to whether or not the company is engaged in active business outside India. 7. The place of effective management in case of a company engaged in active business outside India shall be presumed to be outside India ifthe majority meetings of the board of directors of the company are held outside India. 7.1 However, if on the basis of facts and circumstances it is established that the Board of directors of the company are standing aside and not exercising their powers of management and such powers are being exercised by either the holding company or any other person (s) resident in India, then the place of effective management shall be considered to be in India. 7.2 For the purpose of determining whether the company is engaged in active business outside India the average of the data of the previous year and two years prior to that shall be taken into account. In case the company has been in existence for a shorter period, then data of such period shall be considered. 8. In cases of companies other than those that are engaged in active business outside India referred to in para 7 the determination of POEM would be a two stage process , namely:- (i) . First stage would be identification or ascertaining the person or persons who actually make the key management and commercial decision for conduct of the company’s business as a whole. (ii) Second stage would be determination of place where these decisions are in fact being made. 8.1 The place where these management decisions are taken would be more important than the place where such decisions are implemented. For the purpose of determination of POEM it is the substance which would be conclusive rather than the form. 8.2 Some of the guiding principles which may be taken into account for determining the PoEM are as follows: (a) The location where a company’s board regularly meets and makes decisions may be the company’s place of effective management provided, the Board- (i) retains and exercises its authority to govern the company; and (ii) does, in substance, make the key management and commercial decisions necessary for the conduct of the company’s business as a whole. It may be mentioned that mere formal holding of board meetings at a place would by itself not be conclusive for determination of POEM being located at that place. If the key decisions by the directors are in fact being taken in a place other than the place where the formal meetings are held then such other place would be relevant for POEM. As an example this may be the case where the board meetings are held in a location distinct from the place where head office of the company is located or such location is unconnected with the place where the predominant activity of the company is being carried out. If a board has de facto delegated the authority to make the key management and commercial decisions for the company to the senior management or any other person including a shareholder and does nothing more than routinely ratifying the decisions that have been made, the company’s place of effective management will ordinarily be the place where these senior managersor the other person make those decisions. (b) A company’s board may delegate some or all of its authority to one or more committees such as an executive committee consisting of key members of senior management. In these situations, the location where the members of the executive committee are based and where that committee develops and formulates the key strategies and policies for mere formal approval by the full board will often be considered to be the company’s place of effective management. The delegation of authority may be either de jure (by means of a formal resolution or Shareholder Agreement) or de facto (based upon the actual conduct of the board and the executive committee). (c) The location of a company’s head office will be a very important factor in the determination of the company’s place of effective management because it often represents the place where key company decisions are made.The following points need to be considered for determining the location of the head office of the company:- • If the company’s senior management and their support staff are based in a single location and that location is held out to the public as the company’s principal place of business or headquarters then that location is the place where head office is located. • If the company is more decentralized (for example where various members of senior management may operate, from time to time, at offices located in the various countries)then the company’s head office would be the location where these senior managers,- (i) are primarily or predominantly based; or (ii) normally return to following travel to other locations; or (ii) meet when formulating or deciding key strategies and policies for the company as a whole. • Members of the senior management may operate from different locations on a more or less permanent basis and the members may participate in various meetings via telephone or video conferencing rather than by being physically present at meetings in a particular location. In such situation the head office would normally be the location, if any, where the highest level of management (for example, the Managing Director and Financial Director) and their direct support staff are located. • In situations where the senior management is so decentralised that it is not possible to determine the company’s head office with a reasonable degree of certainty, the location of a company’s head office would not be of much relevance in determining that company’s place of effective management. (d) It may be clarified that day to day routine operational decisions undertaken by junior and middle management shall not be relevant for the purpose of determination of POEM. (e) The use of modern technology impacts the place of effective management in many ways. It is no longer necessary for the persons taking decision to be physically present at a particular location. Therefore physical location of board meeting or executive committee meeting or meeting of senior management may not be where the key decisions are in substance being made. In such cases the place where the directors or the persons taking the decisions or majority of them usually reside may also be a relevant factor. (f) If the above factors do not lead to clear identification of POEM then the following secondary factors can be considered :- (i) Place where main and substantial activity of the company is carried out; or (ii) Place where the accounting records of the company are kept. 9. It needs to be emphasized that the determination of PoEMis to be based on all relevant facts related to the management and control of the company, and is not to be determined on the basis of isolated facts that by itself do not establish effective management, as illustrated by the following examples: i. The fact that a foreign company is completely owned by an Indian company will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. ii. The fact that one or some of the Directors of a foreign company reside in India will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. iii. The fact of , local management being situated in India in respect of activities carried out by a foreign company in India will not , by itself, be conclusive evidence that the conditions for establishing PoEM have been satisfied. iv. The existence in India of support functions that are preparatory and auxiliary in character will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied. 10. It is reiterated that the above principles for determining the PoEM are for guidance only. No single principle will be decisive in itself. The above principles are not to be seen with reference to any particular moment in time rather activities performed over a period of time, during the previous year, need to be considered. In other words a “snapshot” approach is not to be adopted. Further, based on the facts and circumstances if it is determined that during the previous year the PoEM is in India and also outside India then PoEM shall be presumed to be in India if it has been mainly /predominantly in India 11. Further, in case the Assessing officer proposes to hold a company incorporated outside India, on the basis of its PoEM, as being resident in India then any such finding shall be given by the Assessing officer after seeking prior approval of the Principal Commissioner or the Commissioner, as the case may be, in this regard. The Principal Commissioner or the Commissioner shall provide an opportunity of being heard to the company before deciding the matter. 12. The comments and suggestion of stakeholders and general public on the above draft guidance are invited. The comments and suggestions may be submitted by 02nd January, 2016 at the email address (dirtpl1@nic.in) or by post at the following address with “Comments on draft Guidance on POEM” written on the envelop. Director (Tax Policy & Legislation)-I Central Board of Direct Taxes, Room No. 147-D, North Block, New Delhi – 110001 F. No. 142/11/2015-TPL | CBDT | Notification | 23.12.2015 Related Tags CBDT, Notifications, POEM 4 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? 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September 11, 2018 CA Ankit Gulgulia (Jain) 0

Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company. Section 6(3) of the Income-tax Act, 1961, prior to its amendment […]

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Allowability of Interest on Borrowings advanced on Interest Free Basis Allowability of Interest on Borrowings advanced on Interest Free Basis S. 36(1)(iii): Law on when interest expenditure on loans diverted to sister concerns and directors can be allowed as business expenditure explained Citation :- Hero Cycles (P) Ltd vs. CIT (Supreme Court) | CIVIL APPEAL NO. 514 OF 2008 Facts of the Case and Why Revenue Disallowed the Claim of Interest The present appeal preferred by the assessee pertains to the Assessment Year 1988-1989. In the income tax return filed by the assessee for the aforesaid Assessment year, the assessee, inter alia, claimed deduction of interest paid on borrowed sums from Bank under the provisions of Section 36(1)(iii) of the Income Tax Act (hereinafter referred to as ‘Act’). The aforesaid deduction was disallowed by the Assessing Officer vide his Assesssment Order dated 26.03.1991 on the following two points: – (1) The assessee had advanced a sum of Rs.1,16,26,128/- to its subsidiary company known as M/s. Hero Fibers Limited and this advance did not carry any interest. According to the Assessing Officer, the assessee had borrowed the money from the banks and paid interest thereupon. Deduction was claimed as business expenditure but substantial money out of the loans taken from the Bank was diverted by giving advance to M/s. Hero Fibres Limited on which no interest was charged by the assessee. Therefore, he concluded that money borrowed on which interest was paid was not for business purposes and no deduction could be allowed. (2) In addition, the assessee had also given advances to its own directors in the sum of Rs. 34 lakhs on which the assessee charged from those directors interest at the rate of 10 per cent, whereas interest payable on the money taken by way of loans by the assessee from the Banks carried interest at the rate of 18 per cent. On that basis, the Assessing Officer held that charging of interest at the rate of 10 per cent from the above mentioned persons and paying interest at much more rate,i.e., at the rate of 18 per cent on the money borrowed by the assessee cannot be treated for the purposes of business of the assessee. CIT (Appeals) & ITAT Set Aside the Demand The CIT (Appeals) set aside the order of the Assessing Officer holding that the interest paid by the assessee of which deduction was claimed, on the facts of this case, was for business purposes and, therefore, the entire interest paid by the assessee should have been allowed as business expenditure. Hon’ble Supreme Court Ruled in Assessee’s Favour i) Insofar as loans to the sister concern / subsidiary company are concerned, law in this behalf is recapitulated by this Court in the case of ‘S.A. Builders Ltd. v. Commissioner of Income Tax (Appeals) and Another’ [2007 (288) ITR 1 (SC)]. Once it is established that there is nexus between the expenditure and the purpose of business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the Board of Directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. It further held that no businessman can be compelled to maximize his profit and that the income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. (ii) Applying the aforesaid ratio to the facts of this case as already noted above, it is manifest that the advance to M/s. Hero Fibres Limited became imperative as a business expediency in view of the undertaking given to the financial institutions by the assessee to the effect that it would provide additional margin to M/s. Hero Fibres Limited to meet the working capital for meeting any cash loses. It would also be significant to mention at this stage that, subsequently, the assessee company had off-loaded its share holding in the said M/s. Hero Fibres Limited to various companies of Oswal Group and at that time, the assessee company not only refunded back the entire loan given to M/s. Hero Fibres Limited by the assessee but this was refunded with interest. In the year in which the aforesaid interest was received, same was shown as income and offered for tax. (iii) Insofar as the loans to Directors are concerned, it could not be disputed by the Revenue that the assessee had a credit balance in the Bank account when the said advance of Rs. 34 lakhs was given. Remarkably, as observed by the CIT (Appeal) in his order, the company had reserve/surplus to the tune of almost 15 crores and, therefore, the assessee company could in any case, utilise those funds for giving advance to its Directors. Complete Text of the Judgement is as under:- Related Tags Incometax, Judgements, Supreme Court 11 0 0 2 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? 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September 11, 2018 CA Ankit Gulgulia (Jain) 0

Allowability of Interest on Borrowings advanced on Interest Free Basis S. 36(1)(iii): Law on when interest expenditure on loans diverted to sister concerns and directors […]

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Government May Consider 100% FDI in E-commerce Government May Consider 100% FDI in E-commerce The government is considering permitting 100% foreign direct investment (FDI) in the marketplace format of e-commerce retailing with a view to attract more foreign investments. The norms on FDI in the sectors of e-commerce, and IT and ITeS are expected to be part of detailed guidelines, which would be rolled out soon by the government, sources said. Last week, a group of senior officials from departments of DIPP, corporate affairs and economic affairs, among others, discussed these matters in great detail. According to sources, the DIPP has suggested that 100% FDI should be allowed in “marketplace model e-commerce” activities. In such a model, the e-commerce company provides an online platform for buyers and a sellers. At present, global e-tailer giants such as Amazon and Ebay are operating online marketplaces in India while homegrown players such as Flipkart and Snapdeal have foreign investments even as there are no clear FDI guidelines on various online retail models. An e-commerce firm carry its business either through marketplace model or inventory based model. In the inventory based model, a company owns and keeps the goods in warehouses. The officials also deliberated upon the definition of “e-commerce”. It may broadly cover transactions between buyer and seller through electronic mode like internet, mobile and televisions. The Department of Industrial Policy and Promotion (DIPP) is working on guidelines for e-commerce sector in the backdrop of ongoing tussle between online and offline retailers. The department has already carried out stakeholders consultations with states, e-commerce companies and other departments. At present, 100% FDI is allowed only in business-to-business (B2B) e-commerce and not in the retail segment. PTI Related Tags E-commerce, FDI New 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? Click Here SEARCH CHARTERED ONLINE CUSTOM SEARCH RSS Twitter Facebook Google+ CONTACT PRIVACY POLICY SITEMAP DISCLAIMERABOUT USSUBMIT YOUR ARTICLE © 2017 Charteredonline. The content is copyrighted to this site and may not be reproduced on other websites. ↑ Government May Consider 100% FDI in E-commerce Government May Consider 100% FDI in E-commerce The government is considering permitting 100% foreign direct investment (FDI) in the marketplace format of e-commerce retailing with a view to attract more foreign investments. The norms on FDI in the sectors of e-commerce, and IT and ITeS are expected to be part of detailed guidelines, which would be rolled out soon by the government, sources said. Last week, a group of senior officials from departments of DIPP, corporate affairs and economic affairs, among others, discussed these matters in great detail. According to sources, the DIPP has suggested that 100% FDI should be allowed in “marketplace model e-commerce” activities. In such a model, the e-commerce company provides an online platform for buyers and a sellers. At present, global e-tailer giants such as Amazon and Ebay are operating online marketplaces in India while homegrown players such as Flipkart and Snapdeal have foreign investments even as there are no clear FDI guidelines on various online retail models. An e-commerce firm carry its business either through marketplace model or inventory based model. In the inventory based model, a company owns and keeps the goods in warehouses. The officials also deliberated upon the definition of “e-commerce”. It may broadly cover transactions between buyer and seller through electronic mode like internet, mobile and televisions. The Department of Industrial Policy and Promotion (DIPP) is working on guidelines for e-commerce sector in the backdrop of ongoing tussle between online and offline retailers. The department has already carried out stakeholders consultations with states, e-commerce companies and other departments. At present, 100% FDI is allowed only in business-to-business (B2B) e-commerce and not in the retail segment. PTI Related Tags E-commerce, FDI New 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? Click Here SEARCH CHARTERED ONLINE CUSTOM SEARCH RSS Twitter Facebook Google+ CONTACT PRIVACY POLICY SITEMAP DISCLAIMERABOUT USSUBMIT YOUR ARTICLE © 2017 Charteredonline. The content is copyrighted to this site and may not be reproduced on other websites. ↑ ShareThis Copy and Paste Government May Consider 100% FDI in E-commerce Government May Consider 100% FDI in E-commerce The government is considering permitting 100% foreign direct investment (FDI) in the marketplace format of e-commerce retailing with a view to attract more foreign investments. The norms on FDI in the sectors of e-commerce, and IT and ITeS are expected to be part of detailed guidelines, which would be rolled out soon by the government, sources said. Last week, a group of senior officials from departments of DIPP, corporate affairs and economic affairs, among others, discussed these matters in great detail. According to sources, the DIPP has suggested that 100% FDI should be allowed in “marketplace model e-commerce” activities. In such a model, the e-commerce company provides an online platform for buyers and a sellers. At present, global e-tailer giants such as Amazon and Ebay are operating online marketplaces in India while homegrown players such as Flipkart and Snapdeal have foreign investments even as there are no clear FDI guidelines on various online retail models. An e-commerce firm carry its business either through marketplace model or inventory based model. In the inventory based model, a company owns and keeps the goods in warehouses. The officials also deliberated upon the definition of “e-commerce”. It may broadly cover transactions between buyer and seller through electronic mode like internet, mobile and televisions. The Department of Industrial Policy and Promotion (DIPP) is working on guidelines for e-commerce sector in the backdrop of ongoing tussle between online and offline retailers. The department has already carried out stakeholders consultations with states, e-commerce companies and other departments. At present, 100% FDI is allowed only in business-to-business (B2B) e-commerce and not in the retail segment. PTI Related Tags E-commerce, FDI New 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? Click Here SEARCH CHARTERED ONLINE RSS Twitter Facebook Google+ CONTACT PRIVACY POLICY SITEMAP DISCLAIMERABOUT USSUBMIT YOUR ARTICLE © 2017 Charteredonline. The content is copyrighted to this site and may not be reproduced on other websites. ↑ Government May Consider 100% FDI in E-commerce Government May Consider 100% FDI in E-commerce The government is considering permitting 100% foreign direct investment (FDI) in the marketplace format of e-commerce retailing with a view to attract more foreign investments. The norms on FDI in the sectors of e-commerce, and IT and ITeS are expected to be part of detailed guidelines, which would be rolled out soon by the government, sources said. Last week, a group of senior officials from departments of DIPP, corporate affairs and economic affairs, among others, discussed these matters in great detail. According to sources, the DIPP has suggested that 100% FDI should be allowed in “marketplace model e-commerce” activities. In such a model, the e-commerce company provides an online platform for buyers and a sellers. At present, global e-tailer giants such as Amazon and Ebay are operating online marketplaces in India while homegrown players such as Flipkart and Snapdeal have foreign investments even as there are no clear FDI guidelines on various online retail models. An e-commerce firm carry its business either through marketplace model or inventory based model. In the inventory based model, a company owns and keeps the goods in warehouses. The officials also deliberated upon the definition of “e-commerce”. It may broadly cover transactions between buyer and seller through electronic mode like internet, mobile and televisions. The Department of Industrial Policy and Promotion (DIPP) is working on guidelines for e-commerce sector in the backdrop of ongoing tussle between online and offline retailers. The department has already carried out stakeholders consultations with states, e-commerce companies and other departments. At present, 100% FDI is allowed only in business-to-business (B2B) e-commerce and not in the retail segment. PTI Related Tags E-commerce, FDI New 0 0 0 Newer Post Older Post JOIN OUR WHATSAPP BROADCAST FEATURED VIDEO – CA ANKIT GULGULIA DISCUSSES ON NDTV GST ON REAL ESTATE GST IN 2 HOURS – CHARTS, TABLES AND DIAGRAMS WAY (1,000 + COPIES SOLD) GST In 2 Hours – The Charts, Tables & Diagrams Way (Licensed E-Book) Price – Rs 225/- per Licensed Copy* | Page Count – 158 About the E-book (Licensed) GST IN TWO HOURS – THE CTD WAY! … POPULAR POSTS Eligibility Of Input Tax Credit GST On Motor Vehicles Purchased By Business Concern GST Annual Return (GSTR-9) – Format And Instructions To Fill DELHI VAT – AREA WISE WARD LIST How To Prepare Project Report For Bank Loan :- A Brief Outlining List Of Documents Required For Transit Of Goods Under GST Regime No Input Tax Credit Of Hotel Stay Unless You Registered In State Of Hotel Location HOW TO PREPARE GST RETURN (GSTR-1) – A PRACTICAL STEP BY STEP GUIDE (SCREENSHOTS) GST AUDIT LIMIT, DUE DATE, FORMAT & APPLICABILITY How To Become CFA In India – Exams, Fees, Books & FAQ’s 10 Qualities Of Sachin Tendulkar That Can Make Your Professional Career / Studies Flourish FIND US ON FACEBOOK SUBSCRIBE CHARTERED ONLINE FREE * indicates required Email Address * First Name * Welcome to Chartered Online – Your Trusted Knowledge Resource| Want to Submit Article to this Site? Click Here SEARCH CHARTERED ONLINE RSS Twitter Facebook Google+ CONTACT PRIVACY POLICY SITEMAP DISCLAIMERABOUT USSUBMIT YOUR ARTICLE © 2017 Charteredonline. The content is copyrighted to this site and may not be reproduced on other websites. ↑ ShareThis Copy and Paste

September 11, 2018 CA Ankit Gulgulia (Jain) 0

Government May Consider 100% FDI in E-commerce   The government is considering permitting 100% foreign direct investment (FDI) in the marketplace format of e-commerce retailing […]

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