Clarification in respect of residency under section 6 of the Income-tax Act, 1961

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TP - High cost for services rendered for implementing a software does raise doubts, but mere suspicion is no basis for holding that no services were rendered by AE for said purpose: ITAT (See 'Breaking News')

TP - Companies which are distinct from assessee on account of high turnover, functional dis-similarity & difference in working capital merit being excluded as comparables for benchmarking purposes: ITAT (See 'Breaking News')

INTL -Income of a non-resident assessee cannot be taxed in India where such person is employed abroad during relevant period: ITAT (See 'Breaking News')

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I-T - It is wholly inequitable for Department to give short credit to tax duly deducted and deposited based on claim that may be made in return of income: HC (See 'Breaking News')

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DTAA - Providing customer-based information & guidance does not entail problem solving skills or operations or knowledge which allows recipient to perform services independently in future; consideration therefor not treatable as FTS: ITAT (See 'Breaking News')

INTL - Revisionary order passed u/s 263 is invalid, where assessee is not given opportunity to contest the allegations levelled by the CIT: HC (See 'Breaking News')

INTL - Buyback transactions would not be treated as transfer for capital gains purposes; power of revision is unwarrantedly exercised where it is based on a hypothetical assumption of facts: ITAT (See 'Breaking News')

TP - Resale Price Method for benchamarking purposes is appropriate for assessee-company whose activities are limited to purchasing & reselling products without adding any value & which is consistent with those of a routine distributor: HC (See 'Breaking News')

I-T - Payments made overseas for general support services, for which no technology was made available, cannot be taxed as 'FTS': ITAT (See 'Breaking News')

I-T - If purported reasons that prompted AO to reassess and disallow DAP expenditure incurred on production, only demonstrate change of opinion on part of AO, then same can't form basis of reopening: HC (See 'Breaking News')

INTL - Re-assessment proceedings invalidated where based on erroneous information & where commenced in a mechanical manner & without due application of mind: ITAT (See 'Breaking News')

TP - AO could not have assumed jurisdiction u/s 147 based on audit objections after expiry of four years from relevant A.Y: HC (See 'Breaking News')

INTL - Additions framed u/s 69 are invalid where assessee substantiates nature & source of investment & thus discharges onus of proof: ITAT (See 'Breaking News')

DTAA - Comparable company merits being excluded where it operates with extraordinary margins & diverse business interests, including intangibles in contrast to assessee-company: ITAT (See 'Breaking News')

TP - As is trite law, transfer pricing adjustment has to be done only in respect of international transactions with associated enterprises & not at entity level: ITAT (See 'Breaking News')

DTAA - Payments made by Google India Pvt Ltd. to Google Ireland Limited (GIL) for the Adwords program are not in the nature of royalty or FTS & therefore, cannot be taxed in the hands of assessee: ITAT (See 'Breaking News')

TP - No separate ALP adjustment is required for payment of royalty if TNMM approach has been adopted at entity level: ITAT (See 'Breaking News')

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Clarification in respect of residency under section 6 of the Income-tax Act, 1961 By TII News Service May 08, 2020 , New Delhi
GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NEW DELHI CIRCULAR NO 11/2020, Dated: May 8, 2020 Clarification in respect of residency under section 6 of the Income-tax Act, 1961 Section 6 of the Income-tax Act, 1961 (the Act) contains provisions relating to determination of residency of a person. The status of an individual, as to whether he is resident in India or a non-resident or not ordinarily resident, is dependent, inter-alia, on the period for which the person is in India during a previous year or years preceding the previous year. 2. Various representations have been received stating that there are number of individuals who had come on a visit to India during the previous year 2019-20 for a particular duration and intended to leave India before the end of the previous year for maintaining their status as non-resident or not ordinary resident in India. However, due to declaration of the lockdown and suspension of international flights owing to outbreak of Novel Corona Virus (COVID-19), they are required to prolong their stay in India. Concerns have been expressed that this extra stay in India may make them a resident of India under section 6 of the Act. 3. In order to avoid genuine hardship in such cases, the Board, in exercise of powers conferred under section 119 of the Act, has decided that for the purpose of determining the residential status under section 6 of the Act during the previous year 2019-20 in respect of an individual who has come to India on a visit before 22nd March, 2020 and: (a) has been unable to leave India on or before 31st March, 2020, his period of stay in India from 22nd March, 2020 to 31st March, 2020 shall not be taken into account; or (b) has been quarantined in India on account of Novel Corona Virus (Covid-19) on or after 1st March, 2020 and has departed on an evacuation flight on or before 31st March, 2020 or has been unable to leave India on or before 31st March, 2020, his period of stay from the beginning of his quarantine to his date of departure or 31st March, 2020, as the case may be, shall not be taken into account; or (c) has departed on an evacuation flight on or before 31st March, 2020, his period of stay in India from 22nd March, 2020 to his date of departure shall not be taken into account. [F.No.370142/18/2020-TPL] (Neha Sahay) Under Secretary (TPL)-I

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