TaxandTrade

Among the litany of amendments in the direct tax section in the recent Finance Act, 2014, there is one piece of amendment that has perhaps not received the attention it deserves.   The amendment to Sec 2(14) of the Income Tax Act has redefined  the term 'Capital Assets' by bringing in all kinds of securities dealt with by Foreign Institutional Investors (FIIs) under the banner of 'Capital Assets'.   The implication of this is that after 1st April 2014,  securities held by FIIs  - even if they have been dealt as stock in trade - shall be considered as Capital Asset and not as Stock in Trade.  Is that one more amendment with 'malice'?  Read on to find how the differing interpretation of various Judicial Forums on FII investment left no option to the law makers but to bring about this amendment.   What are FIIs:   Currently there are more than 1450 FIIs registered with SEBI and with garguantuan funds avaiable at their disposal, the...

May 23, 2020  [2020] 116 taxmann.com 685 (Article) The Mumbai Tribunal in  Volkswagen Finance P Ltd.  v.   ITO  [2020] 115 taxmann.com 386 recently decided on the taxability of income earned by a Non Resident whose entire operations were carried on outside India. The decision was path breaking as the Tribunal did not follow the existing jurisprudence on the subject and deemed the payment made to the Non Resident u/s 9(1)( i ) based on the amorphous nature of the term 'business connection'. The case: Volkswagen Finance Private Ltd. ('VW' in short) was part of the Volkswagen group of companies engaged in manufacture and sale of automobiles. VW organized a lavish event in UAE, to launch the group's new AUDI 8L specifically for potential Indian customers. VW flew in a number of Indian customers to UAE and also roped in Celebrity Star and Oscar award winner, Jonathan Cage of US to stage an appearance in the event. It was a mega event organized outside India where Cag...