Skip to main content

SC explains 'related' companies in taxation

If two companies have to be declared 'related persons' for excise purposes, there should be mutuality of interest in the business of each other. If there is only 'one-way traffic', the two companies are not related. The revenue authorities must prove mutuality of interest or "two-way traffic", Supreme Court stated while dismissing the appeal of the commissioner of central excise against the order of the appellate tribunal in a case involving Goodyear South Asia Tyres Ltd. The company in this case was a joint venture of RPG SATL and Goodyear. It manufactured and supplied tyres exclusively to Ceat and Goodyear sold in their brand names. Goodyear and RPG Ceat had 50:50 shares in the assessee company. The excise authorities issued demand notice to the company on the basis of related persons under section 4 of the Excise Act. The company contended that its sale of tyres to the two companies was on principal to principal basis and at arm's length. The commissioner rejected the plea but the tribunal accepted it. On appeal, Supreme Court upheld the tribunal's view The assessee company had no interest in the business of the other two. "The fact that the two buyers had given Rs 85.66 crore interest-free loan to the assessee company by itself may not be a reason to hold them as related persons in the absence of any mutuality of interest existing between them," the judgment said.

 Article referred: http://www.business-standard.com/article/opinion/sc-explains-related-companies-in-taxation-115080900763_1.html

Comments

Post a Comment

Most viewed this month

Appellate authorities under Special Statutes cannot be asked to condone delay

Madras High Court in R.Gowrishankar vs. The Commissioner of Service Tax has held that Appellate authorities cannot be asked to condone the delay, beyond the extended period of limitation A Division Bench comprising of Justices S. Manikumar and D. Krishnakumar, made this observation while considering an appeal filed against Single Bench order declining to set aside the order made in the condone delay petition filed by the petitioner to condone 223 days in filing the appeal before the Commissioner of Service Tax (Appeals). Article referred: http://www.livelaw.in/appellate-authorities-special-statutes-cannot-asked-condone-delay-beyond-extended-period-limitation-madras-hc/
Post a Comment
Read more

'Seize assets to pay damages to accident victim'

Her story might be an inspiration for the physically challenged but justice has remained elusive for her. In 2008, a bus accident left research engineer S Thenmozhi, 30, paraplegic. In April 2013, the motor accident claims tribunal directed the Tamil Nadu State Transport Corporation (TNSTC) to provide her a compensation of 57.9 lakh. However, TNSTC refused to budge and on Tuesday a city court ordered attaching of movable assets of the transport corporation. Thenmozhi was employed in C-DOT, a telecom technology development centre in Bangalore. On July 21, 2008, she was coming to Chennai in a private bus. Around 2am, the bus had a flat tyre and the driver parked it on the left side of the road near Pallikonda in Vellore district on the Bangalore-Chennai highway. While the tyre was being changed, a TNSTC bus of Dharmapuri division hit the stationary bus. The rear part of the bus was smashed and passengers were injured. Thenmozhi who had a seat at the back of the bus suffered...
Post a Comment
Read more

Mumbai ITAT rules income of offshore discretionary trust is subject to tax in India

The Mumbai Income Tax Appellate Tribunal (ITAT) has recently determined the following issue in the affirmative in the case of Manoj Dhupelia: Should the income of an offshore discretionary trust be subject to tax in India, if no distributions have been made to beneficiaries in India? The question arose from appeals filed by individual beneficiaries in relation to a Lichtenstein-based trust, the Ambrunova Trust and Merlyn Management SA (the Trust) with the ITAT. It is important to note that the individuals in this case were amongst those first identified by the Government of India (GOI) as holding undeclared bank accounts in Lichtenstein. The ITAT ruling raises the following issues: Taxation of Trust Corpus: ITAT classified the corpus of the trust as "undisclosed income" and declared it taxable in the hands of the beneficiaries. Taxation of Undistributed Income: ITAT refused to draw a distinction between the corpus and undistributed income from the trust and declared i...
Post a Comment
Read more