Issues in Corporate Taxation. - jb nagar cpe study circle of wirc of icai

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Facts & Background • Applicant is an American company and is a global manufacturer of engineering bearings, alloys and specially steel related components. • Applicant company does not have a PE in India • It earned long term capital gains which were exempt u/s 10(38). • Assessee applied for a ruling on whether it was liable to Minimum Alternate Tax (MAT) us 115JB on the said gains. • The relevant provisions of section 10(38) is extracted as under: In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included:- (a) The transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No.2)Act, 2004 comes into force; and (b) Such transaction is chargeable to securities transaction tax under that Chapter August, 2011 CA Sanjeev Lalan, Singrodia Goyal & Co. Presentation at JB Nagar CPE Study Circle 12
Arguments Assessee’s arguments The assessee submitted that it would be inappropriate to read only clause (ii) of section 2(17) without conidering the opening lines of section 2 for the purpose of sec. 115JB. Department’s arguments There is no demarcation as such between a “domestic company” and a “foreign company”. The provisions applies to foreign company as well. The obligation in sec. 115JA(2) to prepare P&L Account in accordance with Parts II and III of Schedule VI can apply only to a foreign company which has a place of business within India. Even though it is not obligatory, it is not that the appellant cannot prepare its accounts for its operations in India as per Parts II & III of Schedule VI of the Companies Act. August, 2011 CA Sanjeev Lalan, Singrodia Goyal & Co. Presentation at JB Nagar CPE Study Circle 13
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Issues in Corporate Taxation. - jb nagar cpe study circle of wirc of icai

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