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July 13 To July 19, 2019 u Taxmann’s Corporate Professionals Today u Vol. 45 u 63 IndiadepositsMLIra tificationinstr u-
mentwithOE CDIndia has deposited the documents ratifying
the Multilateral Convention to Implement
Tax Treaty Related Measures to Prevent
Base Erosion and Profit Shifting (MLI).
India’s position on MLI released by OECD
highlights 01-10-2019 as ‘Date for Entry into
Force’ for India.
Earlier, India had ratified the Multilateral
Instruments (MLI) which was signed on June
6, 2017 at Paris. The MLI would not replace
the provisions of tax treaties but would be
read along with tax treaties. Ratification of
MLI has enabled application of BEPS outcomes
through modification of existing tax treaties
in a swift manner
Case Laws
Ballpens&me dicalgiftsgive nto
doctorsbyPharm aCo.withitslogo
aren’tfreebies:ITA TAishika Pharma (P.) Ltd. v. ITO [2019] 106
taxmann.com 192 (Delhi - Trib.)
Assessee-company was engaged in trading/
marketing of medicines. During the year, it
had claimed business promotion expenditure
by way of organizing medical camps/blood
donation camps/free check up camp, etc.,
with distribution of ball pens and medical
gifts, etc, with logo of assessee-company to
doctors and hospitals.
Assessing Officer (AO) disallowed above
expenditure in terms of Explanation 1 to
section 37(1) referring to CBDT Circular
No. 5 of 2012, dated 1-8-2012 and ‘Indian
Medical Council Regulations, 2002’, imposing
prohibition on medical practitioners and
their professional associations from taking
any gifts, travel facilities, hospitality, cash
or monetary grant from pharmaceutical and
allied health sectors.
The Delhi ITAT held that MCI Regulation,
2002 and CBDT Circular No. 5 of 2012
were not applicable to pharma and allied
health care companies. Activity of assessee
of distributing ball pens and medical gifts,
etc., was to make persons connected with
business of assessee aware of its products
and research work carried out by company
for bringing medicine in market. Therefore,
those expenditures were purely incurred for
business purpose of assessee. Thus, impugned
expenditure was to be allowed as business
expenditure as Explanation 1 to section 37(1)
could not be applied. HCupholdsta xdem andofRs.2,500
croresasissueofnotic ebef oremak-
ingdemandu/s115-Onotre quiredCognizant Technology Solutions India (P.)
Ltd. v. DCIT [2019] 106 taxmann.com 388
(Madras)
The issue before the Madras High Court was:
‘Whether Section 115-O of the Income-tax Act,
1961 mandates issuance of show-cause notice,
enquiry before passing a final order?’
The Madras High Court held that section 115-O
of the Income-tax is a charging section on its
own. The only difference between the regular
assessment and Special Provisions (sections
115-O to 115Q) is that under the regular
assessment, the Authorities are required to
verify the returns submitted by the assessee
and the materials to ascertain the income
having escaped from assessment.
However, under the Special Provisions, there
is no need for issuance of notice before
making a demand under section 115-O if
there is no dispute with regard to quantum of
distribution of profit made by the company.
The Assessing Officer need not issue notice
before making a demand under section 115-O
unless the law requires.
The Parliament in its wisdom brought
amendments to the Finance Act and insertedWEEKLY REVIEW