Suraj R. Agrawal

DCIT vs Ankit Metal & Power Ltd; Income Tax Appellate Tribunal Kolkata The assessee company was engaged in the business of manufacturing Ferro-alloys, Ingots, trading in TMT Bar and selling beneficiation coal. For AY 2013-14, being the year under appeal, the assessee company has filed its Return of Income on 30.11.2013 declaring a total loss of Rs. 13.70 crores. The assessee paid tax on book profit u/s 115JB at Rs.13.7 crores. The Assessee’s case was selected for scrutiny through CASS and statutory notices were served upon the assessee to which the assessee responded with the requisite explanation/documents. Thereafter, the AO referred the domestic specific transaction with the related parties to TPO. SDT transaction involving the purchase of raw materials for sister concern/ AE TPO noted that the assessee had purchased several raw materials from its related parties. The assessee had benchmarked these purchases applying the Comparable Uncontrolled Price Method (‘CUP’ Method). The a...

(1) Growth of e-commerce and concerns emerging therefrom: (i) The rapid growth of information and communication technology has resulted in substantial expansion of the supply and procurement of digital goods and services globally, including India. The digital economy is growing at approximately 10% per annum, significantly faster than the global economy as a whole. (ii) At present, in the digital domain, business may be conducted without regard to national boundaries and may dissolve the link between an income-producing activity and a specific location. Hence, business in digital domain doesn’t actually occur in any physical location but instead takes place in "cyberspace." Persons carrying business in digital domain could be located anywhere in the world. Entrepreneurs across the world have been quick to evolve their business to take advantage of these changes. It has also made it possible for  the businesses to conduct themselves in ways ...

Global Scenario United Nations Conference on Trade and Development (UNCTAD) has reported that global E- commerce sales hit $ 26.7 trillion in the year 2019. The value of global B2B e-commerce was $ 21.8 trillion, representing 82% of all e-commerce, including includes both sales over online market platforms and electronic data interchange transactions. Further, the B2C e-commerce value was $ 4.9 trillion in the year 2019. The top three countries effecting B2C e-commerce sales were China, the United States of America and the United Kingdom. The top ten B2C companies are headquartered majorly in North America or China. The cross-border B2C ecommerce amounted to $ 440 billion in the year 2019. Indian Scenario The Indian E-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest E-commerce market in the world by 2034. According to the Indian E-commerce Industry Report (IBEF 2019), India e-commerce sector will reach US$99 billio...

E-commerce is a method of conducting business transactions and not a business transaction by itself. Therefore, the contents of a business transaction done through e-commerce means is no different from that of a business transaction carried out through traditional means. New business models expand the e-commerce frontier in two ways.  First, new business models can enable more transactions to move online in a given market or for a given set of participants. Second, new business models can enable whole new markets to emerge for goods and services that previously could not have been bought or sold online, or allow new participants to enter the market. Digital technologies enable e-commerce innovations and often serve as the backbone of business model developments. Some of these technologies, like smart assistants enabled by artificial intelligence (AI), constitute new channels for selling or purchasing products over electronic networks. Similarly, online payment innovations can help ...

E-commerce or electronic commerce is one of the main components of the Digital Economy. In its widest sense, it encompasses consumer and business transactions conducted over a network, with the help of computers and telecommunications. In other words, e-commerce refers to the exchange of goods or services for value on the internet. E-commerce, inter-alia, includes, online shopping, online trading of goods and services, electronic fund transfers, electronic data exchanges and online trading of financial instruments. The Indian Foreign Direct Investment (FDI) policy defines “e-commerce” to mean buying and selling of goods and services including digital products over a digital and electronic network. OECD defines e-commerce as the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing orders. Accordingly, whether a commercial transaction qualifies as e-commerce is determined by the ordering method ra...

Under section 9(1)(v), interest income is deemed to accrue or arise in India in the following circumstances: (a) Interest payable by the Government; or (b) Interest payable by a resident except: (i) interest payable by a resident, in respect of a any money borrowed and used for the purpose of business or profession carried on by such person outside India or (ii) interest payable by a resident in respect of any debt incurred or any money borrowed and used for the purpose of making or earning any income from any source outside India. It may be noted that where money borrowed by a resident for the purpose of a business or profession carried on by him outside India are actually used for any other purpose, interest payable thereon will be deemed to accrue or arise in India. (Refer circular no. 202 of July 5, 1976) Similarly, interest payable on money borrowed by a resident for the purpose of making or earning any income from any source outside India will be deemed to accrue or arise in Indi...

Section 44B provides that profits or gains of a non-resident from the business of operation of ships are to be taken @ 7.5% of the aggregate of the following amounts: (a) paid or payable, whether in or out of India, to the assessee or to any person on his behalf on account of carriage of passengers, livestock, mail or goods shipped at any port in India. (b) received or deemed to be received in India by or on behalf of the assessee on account of the carriage of passengers, livestock mail or goods shipped at any port outside India. Explanation to Section 44B provides that the amounts referred to above will also include the amount paid or payable or received or deemed to be received by way of demurrage charges or handling charges or any other amount of similar nature. Important Judicial Precedents & Board Circulars: 1. The amounts paid or payable or the amounts received or deemed to be received will also include the amount paid or payable or received or deemed to be received by way of...

Resident A Hindu undivided family, firm, or association of persons etc. is resident in India if the control and management of its affairs is situated wholly or partly in India. But if the control and management is situated wholly outside India, then, a HUF, Firm, AOP etc. is to be regarded as non-resident. Since partial control is sufficient for the purpose of being resident, these forms of person may have in law two places of residence. The residence of partners or of individual members of a Hindu undivided family or association of persons is immaterial for the purpose of determining the residence of the firm or the family or AOP except in so far as such residence affects the control and management of the affairs of the firm or the family. The residence of partners in India normally raises the presumption that the firm is resident in India, but the presumption may be rebutted by showing that the control and management of the affairs of the firm is situated wholly outside India. Not Or...

An individual is taxed as ‘not ordinarily resident’ if he fulfills any of the two alternative conditions laid down in clause (6)(a) of section 6 i.e. (i) he has been non-resident in India in nine out of the ten previous years preceding the relevant previous year; or (ii) he has during the seven previous years preceding that year been in India for a period aggregating to 729 days or less. Also, as inserted w.e.f. assessment year 01.02.2021, a citizen of India who is deemed to be resident in India under clause (1A) or as per Explanation 1 to clause (1), an Indian citizen or a person of Indian origin visiting India and having total income, other than income from foreign sources (except income derived from a business controlled in or a profession set up in India), exceeding INR 15 lakhs during the previous year shall qualify as NOR in India, if his/ her stay is 120 days or more but less than 182 days in India during the previous year. In other words an Individual remains ‘Resident’ if both...

Clause (1) of section 6 lays down two alternative tests for an individual to qualify as ‘Resident’ in India; on satisfying either of them, an individual becomes Resident in India (excepting the cases covered by explanation): Test 1: Clause (1)(a) If during the relevant previous year, he is physically present in India for a period aggregating to 182 days or more ; or Test 2: Clause (1)(c) If he is physically present in India for a period aggregating to 365 days or more in the 4 immediately preceding years and 60 days or more in the relevant previous year . The aforesaid rule of residence is subject to exceptions. By virtue of Explanation 1(a) to section 6(1) in the case of an Indian citizen who leaves India in the relevant previous year as a member of the crew of an Indian ship as defined in section 3(18) of the Merchant Shipping Act, 1958 or for the purpose of employment outside India, the period of 60 days referred to in section 6(1) (c) will be extended to 182 days. Explanation 1(b) ...

The term “total income” has been defined in section 2 (45) of the Income-tax Act, 1961 (“the Act”) as, “the total amount of income referred to in section 5, computed in the manner laid down in the Act”. Therefore, while computing the total income, one has to have regard to the scope of income as specified in section 5 of the Act and then compute the income in the manner laid down in the Act. Section 5 prescribes scope of taxable total income for residents, not ordinarily residents and non-residents. Since the scope of taxable income and the tax liability varies with the residential status of the assessee it is important to determine the residential status of the assessee. The residential status has to be determined in accordance with section 6 of the Act. Scope of Total Income – Residents – Section 5 (1) Persons who are ‘Resident” are charged to tax on – (a) income received or deemed to be received in India in the accounting year, by or on behalf of such person, the date or place of it...

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