www.pnjhub.in we are aggregator platform where you can list yourself as professional and get leads, you can list for chat with customers and also list empty office space. www.licensehub.in we are providing more than 150 license and approval services on one platform. Contact Paras Mittal, Mb 9971002715 TAX LITIGATION SERVICES- WRITEUP FOR SLIDES - Harshit Sharma, 5th Year, B.A., LL.B.(Hons.), Amity Law School, Amity University Madhya Pradesh. SLIDE-1: INTRODUCTION Tax litigation and controversy broadly describes the practice of resolving tax disputes with federal, state, local, and foreign tax authorities. A tax controversy may involve a business (whether for-profit or not-for-profit), trust, estate, or individual, and can result from any form of taxation, including income tax, estate and gift tax, state sales and use tax, or local property tax. In general, tax disputes are separated into civil and criminal matters. SLIDE-2: WHAT IS TAX LITIGATION? Tax Litigation under the Indian judicial system is time consuming. The adjudicating and quasi-judicial appellate authorities act as a fact-finding body under the Income Tax Act, 1961 and the constitutional authorities. High Courts and Supreme Court of India. Moreover, given the legal labyrinth that taxpayers often face, a judicious cost-benefit analysis is imperative in deciding which issues are worthwhile to litigate and which issues are more viable to concede. SLIDE-3: WHY TAX LITIGATION SERVICES? Currently tax litigation in India takes more than two decades to reach its decisiveness. As per recent report of CAG (Comptroller and Auditor General of India) there are Rs.2.2 lakh crore cases are locked up in appeal out of which in most of the cases the government is the appellant. As the tax authorities are getting more aggressive the number of cases appealing in the court are increasing. Also, most of the tax litigation cases pending at various forums are of multinationals, for which they cannot give their precious time and thereby appoint tax advocacy professionals to take care of their cases in the courts of Law. SLIDE-4: TAX LITIGATION OFTEN ARISES IN THE FOLLOWING AREAS • Individual and Partnership matters • Charitable and non-profit making institutions • Cross border transactions on permanent establishment and ascription • Transfer Pricing Matters such as marketing intangibles, management expenses cross border, compensation for captive service, royalty payments, transfer pricing methods and comparable. • Matters concerning withholding of taxes • Corporate Restructuring • Tax Liability related to Royalty Income • Valuation issues under the Customs Act,1962 SLIDE-5: CATEGORIES OF TAX LITIGATION The following are the different classes of Tax Litigation, which are shown on the slide, wherein, - Civil tax matters usually begin with audit, assessment, and collection activities by a taxing authority. Alternatively, a controversy may be initiated by a taxpayer claiming a refund. - Criminal tax matters involve taxpayers alleged to have evaded taxes or otherwise wilfully violated the tax laws. - Corporate Tax matters pertains to the cases taken up by the Tax Authority as opposed from Courts of law and persistently is dealt with their respective Tribunals and appellate Tribunals. (Note: At most times, it is considered as part of Civil Tax Litigation stream) SLIDE-6: CIVIL TAX LITIGATION: AN OVERVIEW Civil Tax Litigation are regulated and handled by following legislations: - Income Tax Act 1961 (Chapters XIX-A, XIX-B and XX). - Income Tax Rules 1962. - The Constitution of India 1950. - Double taxation avoidance agreements. - Income Tax (Dispute Resolution Panel) Rules 2009. - Income Tax (Appellate Tribunal) Rules 1963. - Authority for Advance Rulings (Procedure) Rules 1993. - Income Tax Settlement Commission (Procedure) Rules 1997. - Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 (to be enforced from 1 April 2016 - Code of Civil Procedure 1908. - Central Excise Act 1944. - Customs Act 1962. - Finance Act 1994 (Service Tax). - State-level value added tax, sales tax, entry tax, and luxury tax and advertisement tax legislation. - Goods and Services Tax Act, 2017 SLIDE-7: CRIMINAL TAX LITIGATION: AN OVERVIEW Criminal tax litigation is regulated by the following principal pieces of legislation: - Income Tax Act 1961 (Chapter XXII). - Income Tax Rules 1962. - Code of Criminal Procedure 1973. - Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 - Benami Transactions (Prohibition) Amendment Act, 2016 - Good & Service Tax Law - Central Excise Act 1944. - Customs Act 1962. - Finance Act 1994 (Service Tax) - State-level value added tax, sales tax, entry tax, luxury tax and advertisement tax legislation. SLIDE-8: CORPORATE TAX LITIGATION UPDATE Corporate Tax Litigation recent updated connotes to the 2 broad classifications as has been shown in the slide, which are hereby briefly discussed in the later slides of this presentation. SLIDE-9: PERMANENT ESTABLISHMENT PE Taxation continues to occupy significant focus in India which indicate the following: - Sequence of Ruling given by Judicial Authorities such as Authority for Advance Ruling, Tribunals and courts) - Rulings indicate decisions which are fact specific. However sometimes diverse views are also taken - Tax surveys is an important tool used by tax administration to extract facts SLIDE-10: KEY ISSUES FACED IN PE ESTABLISHMENT BASED ON THE RECENT PRONOUNCEMENTS ARE (i) Sales and Distribution Activities • X Co has a LO in India which is carrying out Sales and marketing activities on behalf of X Co. • LO provides services of identification of customers, understanding their requirements, participating in negotiation. • Indian Customer directly places order with X Co and directly gets the delivery • LO assists in the logistics services • Therefore, the activity of B constitutes Agency PE of X Co. • Case Law: Bangalore ITAT confirms that Korean Company’s LO is PE in India (ii) Procurement activities • X Co. is a wholesaler & retailer of goods carrying out operations worldwide. It also purchases manufactured goods from vendor of India. • The procurement function on behalf of X Co. in India is carried out by LO. • LO assists in vendor identification, collection of information, coordinating and acting as a communication channel • Therefore, activity of LO constitute PE of X Co. In India • Case Law: Authority for Advance Ruling has held that Lo constitutes PE of X Co. In India SLIDE-11: OTHER ISSUES a) Implication on gift of shares of Indian company The transfer of shares by Indian subsidiary by the applicant to its Singapore subsidiary subject to business re-organization scheme without consideration constitutes gift does not attract capital gain tax liability in India b) Mauritius Treaty Implications As per the Mauritian DTAA agreement the capital fain arising to the tax payer is not taxable in India c) Taxability on Promissory notes Discounting of bills does not result to any debtor or creditor relationship. Hence the discounting of bills is not taxable in India d) Taxability of Data Processing Fees As per the India-UK Treaty, there is no transfer of technical skill or know how while providing the services. It means that UK is not rendering any managerial or technical services therefore such payment received is not taxable SLIDE-12: KEY SERVICES OFFERED BY US  Helping in strategizing tax litigation  Exploring alternative tax dispute resolution mechanisms  Assistance in representation before Commissioner of Income tax (Appeals), Dispute Resolution Panel, Income Tax Appellate Tribunal  Assistance in preparation of advance ruling application and representation before AAR.  Assisting, counseling, preparing, representing appeals and petitions before High Courts and Supreme Court. SLIDE-13: THANK YOU AND CHOOSE US TO HELP YOU, IF YOU FACE ANY GRIEVANCE OR PROBLEM.