India: Income Tax

The Black Money Act of 2015 introduced stringent measures to tax undisclosed foreign income and assets held by resident taxpayers in India. What are the consequences for failing to report foreign income or assets, and how does this legislation impact tax compliance for individuals with international holdings?

India is a key destination for cross-border investments, acquisitions and commercial transactions. In this regard, several foreign law firms partner or collaborate with Indian law firms and financial advisors or act independently to advise Indian clients and multinational groups on transactions, arbitrations and various matters requiring foreign law inputs. Such collaborations have resulted in an increased frequency of foreign law firm personnel visits to India.

Welcome to the latest issue of "The Crime Times," dedicated to the intricate and ever-evolving landscape of criminal law in India. We are living in challenging times, marked by an aggressive approach from governmental agencies in initiating criminal prosecutions.

The Mumbai ITAT held that Fair Market Value(‘FMV’) of ESOP shares on the exercise date would constitute the cost of acquisition under section 49(2AA) of the Income-tax Act, 1961 (the ‘Act’), notwithstanding that the related ESOP perquisite was not taxable in India. The Tribunal ruled that section 49(2AA) of the Act does not require actual taxation of the perquisite in India and directed recomputation of capital gains by considering FMV of ESOP shares as the cost of acquisition.

The taxation of employee stock options in India has sparked considerable debate, particularly when vested but unexercised options are repurchased by employers. The Bangalore Income-tax Appellate Tribunal recently examined whether such consideration should be taxed as salary perquisites or capital gains, establishing critical distinctions between the taxation of stock options at exercise versus the taxation of rights embedded in vested options.

The Bangalore Bench of the ITAT has delivered an important ruling clarifying the tax treatment of consideration received on repurchase of vested but unexercised employee stock options (ESOPs). The Tribunal held that such consideration is taxable as capital gains and not as salary since the options were never exercised and no shares were allotted.

The Supreme Court's ruling in Sanand Properties v. JCIT fundamentally redefines the boundaries between reassessment and revision, establishing that disclosure of documents alone is insufficient—tax authorities...

Revisional powers are special statutory powers conferred upon higher authorities to examine and review orders passed by subordinate officers. The primary objective of conferring such powers is to safeguard the interests of the revenue.

One of the key issues before the Ld. Madhya Pradesh Electricity Regulatory Commission (“MPERC”) was whether MB Power was entitled to gross-up its Return on Equity (“RoE”) notwithstanding the fact that, at the corporate level, it had not paid income tax during certain years owing to losses and unabsorbed depreciation arising from its other businesses. MPPMCL opposed the claim, inter alia, on the grounds that the claim was barred by limitation and that grossing-up could not be permitted in the absence of actual tax payment by the corporate entity.