Article
To report or not to report, that is the Branch Office question By Tanmay Bhatnagar
Applicability of Transfer Pricing provisions are generally not envisaged where an Indian company is operating its branch office outside India. However, the taxpayers may have to re-examine this position in the light of the recent judgment of the Gujarat High Court in the case of Axis Bank Limited. Elaborately discussing the said decision, its ramifications, and a detailed analysis, the author points out that it is debatable if the Legislature ever intended to bring the transactions between Indian companies and their overseas branch offices into the ambit of the TP provisions. Further, while observing that the taxpayers may have to re-evaluate their reporting obligations in the light of the decision, the author highlights that the taxpayers should also be cognizant of the fact that the Department may seek to deny credit for the taxes paid in the jurisdiction in which the branch office is situated, basis a re-computation of the business profits attributable to such office.
Notifications & Circulars
- Collection of tax at source under Section 206C(1F) – Additional goods notified
- Form ITR-B to be filed for the block period with respect to search and seizure proceedings
- Expenditure incurred for settlement of proceedings under certain legislations to be denied deduction
- Reporting Long-Term Capital Gains under ITR-1 and ITR-4
- New ITR Forms notified for AY 2025-26
- Direct Tax Vivad se Vishwas Scheme, 2024 – Last date for filing declaration extended
Ratio decidendi
- Provisions of Indian Evidence Act / Bharatiya Sakshya Adhiniyam are not applicable in assessment proceedings under Income Tax Act – Madras High Court
- Compensation in lieu of surrender of ‘right to sue’ is a capital receipt not chargeable to tax as capital gains – ITAT Mumbai
- An appeal is not invalid merely due to amalgamation during appellate proceedings – ITAT New Delhi
- Exemption under Section 54 is available even if new residential property is purchased in one’s spouse’s name – Provisions of Section 54F are pari materia with provisions of Section 54 – ITAT New Delhi
- TDS not applicable on independent professional services by non-residents under India-Sri Lanka and India-Kenya DTAAs – ITAT New Delhi
- Interest available for delayed refund under Direct Tax Vivad se Vishwas Act, 2020 – Kerala High Court
