Latest Blogs from SBS and Company LLP

    Indirect Transfers 2.0 - Study on Taxability of Gain on Alienation of Shares

    Opening Remarks:

    The acquisition of Flipkart by Walmart has attained considerable attention of media. The deal is to the tune US $ 16 Billion, making Flipkart as most valuable e-commerce marketplace in India. Now that the deal is done, the tax considerations/issues surface, one-after the other, the first being the issue of indirect transfers, which recently came up for consideration in the matter of Tiger Global. In this article, we shall deal with the recent judgment of Authority for Advance Rulings (for brevity ‘AAR’) in the matter of Tiger Global International II Holdings[1]. After setting out the ruling, taking this as a case study, we shall adventure to list out the favourable and adverse tax positions, position after MLI[2] and GAAR[3].

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    Tax Collection at Source - Sale of Goods

    Finance Act, 2020 with an intention to widen and deepen the tax net has expanded the scope of provisions of tax collection at source for sale of goods. The obligation to collect tax at source is applicable only for specified sellers when sales were made to specified buyers, which are dealt at more appropriate place. The new provisions are made effective from 01st Oct 2020. In this write up, we shall deal with the new provision and obligations under the same.   

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    Article On Special Measures By The Ministry Of  Corporate Affairs, In View Of Covid-19 Outbreak

    In view of the outbreak of COVID-19, protection and safety of the lives, is the utmost priority, and compliance of the law is secondary, and in this regard, to support and enable Companies and LLPs in India, to address the threat and economic disruptions caused by COVID-19, the Ministry of Corporate Affairs, vide General Circular No.11/2020, Dated: 24.03.2020,  has implemented the following measures to reduce the compliance burden and other risks.

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    Conduct Of Board Meeting And General  Meetings Amidst Covid-19

    An attempt is being made to list out on the provisions relating to the conduct of the Board and General Meeting, and relaxations by the Ministry of Corporate Affairs relating thereto.

    BOARD MEETINGS: 

    All are aware that Section 173 of the Companies Act, 2013, prescribes, the manner in which the meetings of the Board of Directors are to be conducted, including through Video Conferencing or other Audio-Visual means. 

    The rules list out that the following matters/decisions of the Board, cannot be dealt through Video conference means, and can accordingly be passed by a meeting of the Board of Directors: 

    • Approval of the Annual Financial Statements;
    • Approval of the Board’s Report;
    • Approval of the Prospectus;
    • Audit Committee Meetings for consideration of Financial Statement including Consolidated Financial Statement if any, to be approved by the Board under sub-section (1) of section 134 of the Act; and
    • Approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover. 

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    Treatment of Gain/Loss on Foreign Exchange Fluctuations - Income Tax Perspective

    The increase in global trade and dependency on the foreign capital for the purposes of conduct of business in India has led to various transactions with the entities which are situated outside India. The business is conducted with such entities in the foreign currency unlike the Indian currency which is used for conduct of trade with entities located in India. As all are aware that since the rate of foreign currency is market driven, there may always be a difference in the value of foreign currency at which the transaction takes place and at which the transaction gets settled or closed for the purposes of accounting at the Indian entity. The difference arising from such value between the transaction date and settlement/closure date would give raises to gains or losses depending upon the rate of foreign currency on both such dates. The treatment of such foreign exchange (for brevity ‘forex’) gain/loss from the perspective of provisions of Income Tax Act, 1961 (for brevity ‘IT Act’) is the main object of this article. Let us proceed, to understand the treatment of forex gain/loss under the various provisions of IT Act.

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