Finance Act, 2017 amended the Income-tax Act, 1961 (‘IT Act’) to provide that the annual value of building or land appurtenant thereto which is held by the assessee as stock-in trade will be deemed to be Nil for a period of one year from the end of the financial year in which the certificate of completion is obtained in respect of such property.

The issue of liability to deduct tax at source on reimbursement of expenditure can be traced to the difference in claim of the taxpayer and taxman.

Under OECD Model Tax Convention income from professional services was taxed in terms of Article 14 titled ‘Independent Personal Services’ However, Article 14 was deleted from the OECD MTC with effect from 29th April 2000 and the taxation of income from professional services was brought at par with taxation of business profits as provided in Article 7 of OECD MTC.

The liberal interpretation of the term ‘income’ and ‘business’ has not been wide enough to bring into the tax net certain receipts like compensation on termination of managing agency, profit from transfer of DEPB scrip, non-compete fee, etc.,

The income chargeable under the head ‘salaries’ is one of the heads of incomes which covers exhaustively, ‘payments’ made between persons in the capacity of employer and employee.

ITAT Delhi has held that ‘guarantee fee’ will not qualify as interest under the India-UK DTAA or the Income Tax Act, 1961, since it can relate only to payment by a person who has received some amount pursuant to a loan transaction.

RFinance Act 2006 inserted Explanation 1 to Section 40(a)(ii) of the Income Tax Act clarifying that any sum payable outside India and eligible for relief of tax under Section 90 or deduction from the income tax payable under section 91 is not allowable as a deduction under section 40 of the Income Tax Act.

Recently, the European Court of Justice (‘ECJ’), exercising arbitration procedure under Article 273 of the Treaty on the Functioning of the European Union (‘TFEU’) interpreted the term ‘debt-claims with participation in profit’ appearing in Article 11(2) of the Austro-German Double Tax Avoidance Agreement (‘DTAA’).

Valuation of inventory is not supposed to give rise to any income and therefore the same should be at lower of cost or market value.

The Mumbai Bench of the Income Tax Appellate Tribunal had occasion to examine the India-Singapore DTAA in a recent judgment.