Govt. will consider extending deadline of March 31, 2023 to take benefit of lower tax regime u/s 115BAB.

Press release, date 08-06-2020

The Finance Minister, Smt. Nirmala Sitharaman has addressed FICCI National Executive Committee members on June 08, 2020. She said that the Government will consider an extension in the deadline for availing the 15% corporate tax rate on new investments. The Finance Minister has said that she will see what can be done. We want industry to benefit from the 15% corporate tax rate on new investments and I take your point for considering an extension in the deadline of 31st March, 2023.

The Finance minister suggested the industry to submit their recommendations related to the ministry of corporate affairs or SEBI deadlines so that necessary steps could be taken. With regard to the need for reduction in GST rates, the FM has said that GST rate reduction will go to the Council. The council is also looking for revenue. The decision for reduction in rate for any sector has to be taken by the Council.

No reassessment as royalty payment to US Co. duly disclosed & offered to tax by Indian Co. in representative capacity

American Express Travel Related Services Company Inc. v. ADIT – [2020] 116 taxmann.com 887 (Delhi – Trib.)

The assessee-company was incorporated in USA and had principal place of business in USA. It had entered into an agreement with American Express (India) Pvt. Ltd., a company incorporated in India and having a presence in New Delhi. It catered needs of Japan, Asia Pacific, Austria, New Zealand, EMEA, US and LAC Regions and various other countries and locations. American Express (India) Pvt. Ltd. had filed return of income incapacity of representative assessee for assessee-company

Assessing Officer (AO) noticed that there was an agreement under which the assessee company would develop and maintain applications and would also allow the use of systems software and such applications including use of incidental software to American Express (India) Pvt. Ltd. As per said agreement consideration was paid by American Express (India) Pvt. Ltd. to the assessee. AO opined that consideration was for use of right to use system software and applications software and it was covered by the definition of ‘Royalty’ both as per the provisions of the Act as well as Article-12 of the Double Taxation Avoidance Agreement (DTAA) between Indian and US. Since such income was not offered to tax, AO initiated reassessment proceedings.

On appeal, Delhi ITAT held that the American Express (India) Pvt. Ltd. filed return of income in the capacity of representative capacity. Royalty had been offered to tax @ 15% under Article 12 of DTAA between India and USA. Proper disclosure was made in this regard in the return of income filed by assessee in response to notice issued under section 142(1). Thus, it couldn’t be said that any new information had come in possession of AO for invocation of reassessment on this issue.