Article
Capital reduction: End of the road for taxpayer fate?By Varshini UJ
The Supreme Court recently upheld the Bombay High Court decision that the complete reduction of capital (resulting in cancellation of shares) amounts to ‘transfer’ in terms of Section 2(47) of the Income Tax Act, 1961 and the consequent payout would be exigible to tax under the head capital gains. As a corollary, the resultant loss incurred by the taxpayer was allowed to be claimed. The article in this issue of Direct Tax Amicus attempts to explore the possible fate of the taxpayers to claim capital loss in a scenario where no payout is received pursuant to a reduction in share capital. The article discusses a decision of the Special Bench of the Mumbai Tribunal and observes that the matter is yet to attain finality in cases where no payout is received, and the capital reduction is by way of reducing the face value of shares.
Notifications & Circulars
- TDS exemption in respect of purchases made from IFSC units
- TCS on sale of goods – Exemption to IFSC units on purchases
- Vivad se Vishwas Scheme, 2024 – Removal of Difficulties in respect of ‘pending appeals’
- Special provisions regarding operation of cruise ships by non-residents – New rule introduced
- Venture Capital Funds and Finance Companies in IFSCs – New conditions in Income Tax Rules
- Principal Purpose Test in India’s DTAAs – Guidance
Ratio decidendi
- Exemption under Section 10A to new unit – New and identifiable undertaking separate and distinct from existing business should come into existence – Delhi High Court
- Refund of excess TDS deduction – CBDT Circular No. 07/2007, prescribing limitation period for refund, construed as ultra vires – Delhi High Court
- Expenditure deduction allowed to a law firm making payment of licence fee for utilization of goodwill – Delhi High Court
- Secondment of employees – Determining Permanent Establishment under India-South Korea DTAA – Delhi High Court
- Applicability of Section 92BA for Transfer Pricing in regard to domestic transactions with eligible units u/s 80-IA – ITAT Hyderabad
