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A recent deal between Jet Airways and Etihad Airways, valued at $379 million, forms part of the government's new policy to encourage foreign direct investment in India. It is hoped that the infusion of foreign direct investment into civil aviation will result in improvements to the economy, a growth in traffic at Indian airports and the creation of job opportunities.

Corporate Tax


The Delhi High Court recently held that gains arising from the sale of a share of a company incorporated overseas, which derives less than 50% of its value from assets situated in India, is not taxable under Section 9(1)(i) of the Income Tax Act 1961, read with Explanation 5 thereto. This decision has defined the term 'substantial' to be at a threshold of 50%.

In a recent decision, the Delhi High Court held that the mere presence of multiple entities in joint execution of an agreement does not constitute an 'association of persons' and thus cannot be taxed as a separate taxable entity. The court emphatically rejected, among other things, the Income Tax Department's stance that creation of a consortium by joint executors is sufficient to discard the separate taxable status of the entities.

The Supreme Court recently ruled on the criteria for determining whether a contract is a works contract or a sales contract. The decision will help to resolve a significant amount of pending litigation and will have a significant financial impact on the elevator industry.

In furtherance of the final safe harbour rules issued by the Central Board of Direct Taxes in September 2013, the board has now issued a letter in which it put forth certain significant directives and clarifications regarding the implementation of the safe harbour rules. Although the letter is insufficient to clarify all the issues pertaining to safe harbour, it is a welcome step by the government.

The Bombay High Court recently considered a challenge to an assessment order by a petitioner on the grounds that the order was given in violation of the remand order of the Income Tax Appellate Tribunal. The assessment order was further challenged on the grounds that the principles of natural justice had been violated, as the assessee had been given less than 24 hours to respond to the notice requiring it to prove its eligibility.

The Madras High Court recently considered whether import and interstate lease transactions were subject to tax if the lease agreements for such transactions were entered into before the provision enabling the government to levy tax on such transactions was introduced. The court ruled that all lease rentals realised after the amendment to the act would attract tax, irrespective of the date of the lease agreement.

More updates >

International Trade


In the complex and ever-evolving world of trade, it is common for manufacturers to sell their products through trading houses. More often than not, the trading house is involved in invoicing only. This update briefly examines the effect of such trade arrangements with regard to the Indian anti-dumping regime and the interesting dichotomy observed therein.

The addition of royalty payments to the assessable value of imported goods has long been a contentious issue. In a recent case, it was held that the lump sum royalty paid to the supplier for the grant of cinematic rights, television rights and video rights of films and programmes could be included in the assessable value of the master tapes of the films and programmes.

The High Court recently ruled that the department has no power to adjudicate in respect of property held by a person other than the defaulter. The case involved a defaulter who had failed to pay anti-dumping duty on goods imported by him in the course of his business. In response, the department imposed a restraint order with respect to property held in the name of the defaulter's wife and children.

The Customs, Excise and Service Tax Appellate Tribunal recently observed that when an appellant discharges its duty liability as a 100% export-oriented unit, it is no longer entitled to claim the benefits available to such a unit. However, the benefits available to a domestic tariff area unit would now become available to the appellant. Accordingly, the appellant was allowed to file shipping bills under the drawback claim.

In a recent High Court case, the appellant – a manufacturer of iron, steel and allied products – imported certain raw materials classified under a customs tariff heading that deemed them exempt from customs duty. However, at the time of import, while provisionally assessing the goods, the superintendent of customs changed the classification of imported goods, which resulted in a 5% increase in duty liability.

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal recently ruled that the customs authorities cannot demand duty from exporters in relation to any irregularity noticed by them in the context of an export scrip, as such matters instead fall within the purview of the Directorate General of Foreign Trade. The case concerned an exporter of frozen and fresh chilled meat.

More updates >



The Supreme Court has held that Part 1 of the Arbitration and Conciliation Act is not applicable if parties have chosen the seat of arbitration and the law governing the arbitration agreement to be outside India, even if Indian law is chosen as the law governing the substantive contract and the agreement was entered into before September 6 2013.

The judiciary has often shown that it is by far the most mature of the three institutions that form the backbone of the Constitution. In a recent case, the judiciary has stepped in to balance the equities in an unequal match by balancing the rights of a lawful lessee against the rights of banks under the Transfer of Property Act and by recognising that that the rights of a bona fide lessee in lawful possession of property cannot be trampled.

A recent Supreme Court decision has held that a court exercising jurisdiction under Sections 8 and 11 of the Arbitration and Conciliation Act is not rendered powerless to refer the dispute to arbitration just because a contract is said to be void from the outset. The court reconsidered its much-criticised decision in Maestro in favour of arbitration, holding that the Maestro decision was incorrect and could not be relied on.

The Bombay High Court recently considered whether the requirement to hold shareholders' meetings under the Companies Act 1956 can be dispensed with and substituted by electronic voting and postal ballot under Section 110 of the Companies Act 2013. The court's final determination is pending, but an order has been released which provides the court's prima-facie views.

The Supreme Court was recently required to consider whether the comptroller and auditor general is competent to conduct an audit of the accounts of private companies. The court stressed that the comptroller and auditor general's powers do not include carrying out a statutory audit of service providers' accounts, but are limited to ascertaining whether the union is getting its legitimate share by way of revenue sharing.