Latest Blogs from SBS and Company LLP

    SBS Wiki E Journal April 2022

    In this 93rd edition of ours, we bring you an important ruling of Mumbai ITAT in the matter of Balaji Trust which dealt with taxation of brand ‘Essar’ received as gift. The Tribunal opined that the receipt of brand ‘Essar’ is on a capital account and cannot be included in ‘income’ as per Section 2(24) to bring the same to tax under Section 56(1) of Income Tax Act. The Tribunal also ruled out the possibility of taxing such receipt under old Section 56(2)(vii), stating that brand ‘Essar’ is not an artwork. Though there are other important aspects in the Tribunal judgment, our attention was given only to the taxation part. I urge everyone to read the entire judgment along with our article.

    The next article is on another important ruling in the context of penalties under Black Money Act. The Assessing Officer tried to levy penalty under Section 43 of Black Money Act on assessee, since she has failed to disclose that she was a second signatory to a foreign bank account. The assesse pleaded on bonafides and requested to set aside the penalty. The Tribunal stated that the stringent provisions of Black Money Act cannot be attributed unless there is a malafide and no penalties should be slapped for genuine bonafide issues.

    The final article is on the taxation of revenue sharing arrangements under Indirect Tax laws. One of the grey areas in indirect taxation is to how the revenue sharing arrangements would be taxable. The demands were being proposed only based on Circulars issued by CBIC without going into the facts whether there exists a service provider – service receiver relationship. The said task is left to the courts and tribunals, which have come to rescue of the assessees and stated that all such transactions are on principal to principal and does not attract tax. The said aspects would catch more fire in the GST era and the CBIC has to step in to provide a detailed guidance to avoid unnecessary litigation.

    I hope that you will have good time reading this edition and please do share your feedback. I will also urge clients to mail us topics or issues on which you want us to deliberate in our future editions, so that we can contribute to the same.

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    SBS Wiki E Journal March 2022

    In this edition, we bring you, the second part of the article on the understanding of the depth of the most litigative entry in the indirect taxation sphere, which is agreeing to the obligation to refrain from an act or tolerate an act or to do an act.

    The next article is on the changes to the existing faceless assessment scheme thereby clearing ambiguities and providing more clarity.

    We hope that you will have good time reading this edition and please do share your feedback. I will also urge clients to mail us topics or issues on which you want us to deliberate in our future editions, so that we can contribute to the same.

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    Updates in Labour Laws

    Jurisdiction in ‘Work From Home’ Situations:


    • In Mangala A G vs. HIL (India) Limited [Kerala HC WP(C) No. 2342/2021 26.11.2021], the question that has arisen for consideration is, what would be the jurisdiction of court in the case of employee who is working from home. The court stated that the question that now boils down to whether mere permission to work from home is sufficient to confer jurisdiction on the court, within whose jurisdiction the employee was working.
    • The Court further stated that, if each person who works from home is permitted to raise their objection from his territorial jurisdiction, definitely, it may confer jurisdiction on umpteen number of Courts and may call upon the employer to face litigation in different jurisdictions.
    • However, as the situation changes and telecommuting or work from home becomes a permanent feature, unlike the temporary phase that has arisen at present, wherein, as a part of contract of employment, persons who are freshly recruited are permitted to remain in different stations and work from there, with facilities being provided by the employer or where the employer pro-actively encourage the employee to improve the business there and/or provides facilities, in that jurisdiction, the situation may be different. The employer, in such cases will be free to include appropriate clause relating to jurisdiction in the contract of employment.
    • In the above circumstances, the legal position seems to be very clear that, when a person is permitted to work from home merely as a concession or a convenience, place from where the person so work is not sufficient to confer any jurisdiction.

    The Story of Most Favored Interpretation of MFN Clause in Treaties


    This article aims at understanding the concept of Most Favored Nation (‘MFN’) clause in the Double Taxation Avoidance Agreement (‘DTAA’ or ‘Treaty’) between India and other countries, issues and controversies therein.

    A country enters into treaty with other country for various purposes, the main object of which is for elimination of double taxation by way of sharing/forgiving taxation rights in respect of income earned by assessee.

    As there is a requirement to share/forgive taxation rights by two countries, treaty may be concluded on different terms with different countries. In order to protect the interest of the countries for sharing taxation right, some countries may insert MFN clause in the treaty between them.

    Succession by Female – Prior to Hindu Succession Act – SC answers in Aurnachala Gounder

    The recent decision of Honourable Supreme Court in matter of Aurnachala Gounder v. Ponnusamy[1] has reiterated the rights of a female for succeeding to the property in absence of a male issue, though the succession happened prior to the enactment of Hindu Succession Act, 1956. The matter revolves around, who would be the successor to the self-acquired of the father who has only a daughter or brother’s son. The trail court and high court have held that the property would devolve by survivorship instead of succession. Since the father does not have any male issue and the daughter has deceased without any issue, the property would devolve by survivorship on the son of deceased brother. The next question that has come up is, if the property is to be devolved by succession to the daughter, how would the succession happen post her demise. The Supreme Court after referring to the various commentaries and judicial precedents has held that the self-acquired property would devolve on the daughter through succession and not to brother’s son by survivorship, despite of the fact that the succession happened prior to the enactment of Hindu Succession Act. In this article, we shall analyse the fact, the observations of trail and high court and the ultimate ruling by the Supreme Court.    

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