India Tax Konnect - October 2013


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KPMG India Tax Konnect deals with recent tax and regulatory developments.

The month of September witnessed some positive developments on the economic front. While industrial production improved compared to last month, it continues to be volatile. The index of industrial production grew by 2.6 percent in July 2013. Such growth is mainly attributable to subsegments such as manufacturing and electricity. Capital goods recorded high growth of more than 15 percent, suggesting improved business sentiment and better growth prospects.

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India Tax Konnect - October 2013

  1. 1. OCTOBER 2013 IndiaTax Konnect Editorial The month of September witnessed some positive developments on the economic front.While industrial production improved compared to last month, it continues to be volatile.The index of industrial production grew by 2.6 percent in July 2013. Such growth is mainly attributable to sub- segments such as manufacturing and electricity. Capital goods recorded high growth of more than 15 percent, suggesting improved business sentiment and better growth prospects. The Government of India (GOI) notified the much-awaited General Anti Avoidance Rules (GAAR) that will come into effect from 1 April 2015 and will apply to business arrangements with a tax benefit exceeding INR 30 million.The rules provide that GAAR will not apply to any income from the transfer of investment made before 30 August 2010. However, without prejudice to the above, it will apply to any arrangement, irrespective of the date on which it has been entered into, in respect of the tax benefit obtained from the arrangement on or after 1 April 2015.The Rules also provide that GAAR will not apply to foreign institutional investor who is a taxpayer under the act and has not taken the benefit of the tax treaty and who has invested in listed securities, or unlisted securities, with prior approval of Securities Exchange Board of India and such other regulations as may applicable. The GOI also notified the Safe Harbour Rules (SHRs) with an object to minimise transfer pricing disputes and improve the overall investment climate in India from a tax perspective. Considering the various amendments in the final SHRs as compared to the draft, it appears that the consultative approach adopted by the revenue authorities found relevance. The Ministry of Corporate Affairs had constituted a committee in August 2012 under the chairmanship of Shri M.Damodaran, former Chairman, Securities and Exchange Board of India for reforming the regulatory environment for doing business in the country.The committee conducted an in-depth study in the entire gamut of regulatory framework and prepared a detailed roadmap for improving the climate of business in India. Easing of business environment mandates extensive examination of regulations in different areas of root functioning such as financial reforms, governance reforms, liberalised policy framework, process reforms, etc. On the international tax front, the MumbaiTribunal, in the case of Reliance Infocom Ltd., has held that ‘shrink wrapped’ or ‘off the shelf’ software is taxable as a royalty under the Act and various tax treaties.TheTribunal held that licence granted for making use of the copyright in respect of the shrink wrapped software amounts to transfer of right to use the copyright. The MumbaiTribunal in the case of Damani Estates & Finance Pvt Ltd. has held that disallowance under Section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962 is also applicable to shares held as stock-in-trade. Further, it was held that the purpose for which the shares were purchased and held would not impact the applicability of Section 14A, which gets attracted on incurring the expenditure in relation to a tax-exempt income i.e. dividend income. We at KPMG would like to keep you informed of the developments on the tax and regulatory front and its implications on the way you do business in India.We would be delighted to receive your suggestions on ways to make this Konnect more relevant. Tax & Regulatory Contents International tax 2 CorporateTax 2 Mergers and acquisitions 5 Transfer Pricing 6 Indirect tax 7 Personal taxation 11
  2. 2. Key highlights of the tax treaty are as follows: • Business profits will be taxable in the source state if the activities of an enterprise constitute a Permanent Establishment (PE) in the source state; • Dividends, interest, royalties and fees for technical services will be taxed both in the country of residence and in the country of source; • Provisions for effective exchange of information including exchange of banking information between the tax authorities of India and Latvia have been incorporated; and • Anti-abuse provisions have been incorporated to ensure that the benefits of the tax treaty are availed of by genuine residents of the two countries. Press release dated 18 September 2013 – www.pib.nic International tax Decisions Payment for supply of standard software is in the nature of ‘Royalty’ The taxpayer, an Indian company, engaged in the telecommunication business made payments to various non- resident companies towards the purchase of standard software required for its telecommunication network. In response to an application under section 195(2) of the Act, the Assessing Officer (AO) held that the payments for purchase of software were in the nature of a ‘royalty’ and accordingly tax was required to be deducted from these payments. The issue for consideration before the MumbaiTribunal was whether the payments made by the taxpayer towards purchase of standard software were in the nature of ‘royalty’ under the provisions of the Act and under the respective tax treaties. Based on the facts of the case, theTribunal, inter-alia, observed and held as follows: • In the instant case, as the payment was for supply of software only, and not for embedded software (wherein software is supplied as part of the equipment), the decision of the Karnataka High Court in the case of CIT v. Synopsys International Old Limited [2012] 28 162 (Kar HC) and CIT v. Samsung Electronics Co. Ltd. and others [2012] 345 ITR 494 (HC Kar), wherein the payments for supply of software were held to be in the nature of royalty, would be applicable.The decisions of the Delhi Special Bench and the Delhi High Court in the case of Motorola Inc v. DCIT [2005] 95 ITD 269 (Del), DIT v. Ericsson A.B [2012] 343 ITR 470 (Del HC) and DIT v. Nokia Networks OY [2012] 25 225 (Del HC), wherein it was held that the payments for embedded software were not in the nature of royalty, were not applicable to the instant case. • Purchase of ‘off-the-shelf’ or ‘shrink wrapped’ software amounted to transfer of part of the copyright and transfer of the right to use the copyright for internal business as per the terms and conditions of the agreement. • Accordingly, the payments made by the taxpayer towards purchase of standard software were in the nature of ‘royalty’ and tax was required to be deducted from these payments. DDIT v. Reliance Infocom Ltd [2013][TS- 433- ITAT][MUM] Notifications/Circulars/Press releases India signs tax treaty with Latvia The GOI signed an agreement with the Government of Latvia on 18 September 2013 for avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (tax treaty). The tax treaty is expected to provide tax stability to residents of India and Latvia, facilitate mutual economic cooperation and stimulate the flow of investment, technology and services between India and Latvia. 2 Corporate tax Decisions Import contract without ‘license’ illegal; expense on transfer of contractual obligation is to be disallowed under explanation to Section 37 The taxpayer was engaged in trading of various goods, in local as well as international markets. During AY 2004-05, the taxpayer had entered into transactions with Swiss Singapore Overseas Enterprises Pvt. Ltd., UAE (SSOE), for import of furnace oil of a specified quantity.The taxpayer did not hold requisite license issued by the concerned authority, and so the oil was not imported legally. Accordingly, in order to avoid criminal / penal proceedings, the taxpayer approached its sister concern BGM Exim Ltd, which had license, to import the products.The taxpayer purchased furnace oil from its sister concern and paid ‘commission’ of Rs. 28 lakhs, for transfer of contractual liability for importing furnace oil from SSOE. Unable to elicit a satisfactory explanation for the expense from the taxpayer, the AO disallowed the expense. The AO’s order was then reversed by the CIT(A). However, theTribunal confirmed the AO’s original order, disallowing the expense. The Gujarat High Court, upholding theTribunal Order, held that the payment was not allowable under Explanation to Section 37(1) of the Act.The High Court in coming to this conclusion observed that the amount of commission was essentially paid
  3. 3. 3 for the transfer of a contractual obligation. However, as per the prevalent law, a license was necessary for importing furnace oil, which was not available with the taxpayer.The High Court further held that even by ignoring the term “commission” and simply considering the character of the payment ‘in substance’, it cannot be justified that there was any valid claim for allowing payment as a consideration for transfer of a contractual obligation.The High Court noted the principles laid down by the Supreme Court in the case of Prakash Cotton Mills v. CIT [1993] 201 ITR 684 (SC), wherein it was held that when the payment for imports are composite in nature, (i.e. partly compensatory and partly penal), the authority had to bifurcate the two components and give a deduction of that component which was compensatory in nature and refuse deduction of that component which was penal in nature. As the taxpayer failed to show the compensatory nature of the commission, the claim was disallowed. OverseasTrading and Shipping Co. Pvt. Ltd. v. ACIT [TS-453- HC-2013 (Guj HC)] Service tax collected by non-resident shipping company, forms part of presumptive income taxable under Section 44B(2) of theAct;Theory of ‘element of profit’ not applicable under Section 44B The taxpayer was a company incorporated in Hong Kong and was engaged in the business of operations of ships in international waters.The taxpayer computed total income at the rate of 7.5 percent of total collection as per the provisions of Section 44B read with Section 172 of the Act.The taxpayer, while filing return of income, excluded the component of service tax while computing presumptive income at the rate of 7.5 percent under Section 44B of the Act.The AO ordered that service tax to be included in the computation of presumptive income under Section 44B of the Act.The Dispute Resolution Panel (DRP) confirmed the order of AO. The MumbaiTribunal held that the ‘theory of element of profit’ would not apply to the aggregate amount as specified in sub- section (2) of Section 44B.TheTribunal held that the levy of tax on sale of goods or services was reflected in bills, and the amount received on account of service tax was a part of the price of carriage/shipped service and hence would be in the nature of a trading receipt.Thus service tax would form part of turnover for computing presumptive profit under Section 44B of the Act.TheTribunal also held that if the element of profit was the only criteria for inclusion or exclusion of any amount, the demurrage charges or handling charges should not have been included in the aggregate amount for the purpose of determining the presumptive income, because they did not represent an element of profit; it was not the legislature’s intention to exclude items without a profit element. Further theTribunal also relied on the decision of Supreme Court in the case of Chowringhee Sales Bureau (P) Ltd. vs. CIT [1973] 87 ITR 542.TheTribunal also distinguished ruling of Bombay High Court in the case of CIT v. Sudarshan Chemicals Industries Ltd. [2000] 245 ITR 769 (Bom) [relied upon in Islamic Republic of Iran Shipping Lines v. DCIT [2011] 11 349 (Mum), stating that it was related to provisions of Section 80HHC, which itself provided for a definition of turnover.The Tribunal also noted that there are various decisions of Mumbai and DelhiTribunal that have taken divergent views. China Shipping Container Lines (Hong Kong) Co. Ltd. v. ACIT [TS-428-ITAT-2013(Mum)] No withholding of tax is required on payment of service tax levied on fees for technical/professional services The taxpayer was a project of the Government of Rajasthan for the infrastructure development and civic amenities in certain areas and cities in the State of Rajasthan. In relation to this project, the taxpayer appointed the technical and project consultants along with limited companies and corporate consulting firms.The taxpayer deducted income-tax at source from the payments it made and deposited the same as per the relevant provisions of the Act and the return for the same was filed in due time.The taxpayer’s main consultants were charging service tax at the prevailing rates on the fees was paid as per the agreement by the taxpayer.The tax was deducted on fees and other payments of expenses as part of the contract. However, no tax was deducted on service tax in view of the terms of contract.The AO raised a demand along with interest thereon on account of a default in complying with withholding tax provisions on the amount paid as service tax.The CIT(A) dismissed the AO’s order.TheTribunal dismissed the tax department’s subsequent appeal against the CIT(A) order. The High Court observed that, as theTribunal had considered the agreement and recorded a finding that as per the terms of contract, amount of service tax was to be paid separately, therefore, the amount was not subject to withholding tax provisions. Further referring to the provisions of Section 194J of the Act, and Circular no. 4/2008 and No.275/73/2007-IT(B) dated 28 April 2008 and 30 June 2008 respectively, the Court stated the words “any sum paid”, used in Section 194J of the Act, related to fees for professional services/technical services. As per the terms of agreement, the amount of service tax was to be paid separately and was not included in the fees for professional services/technical services.The High Court thus concurred with the order of the lower authority, which was in accordance with the provision of Section 194J of the Act. CIT (TDS) v. Rajasthan Urban Infrastructure Development Project (DB ITA No. 235/2011, DB ITA No. 222/2011, DB ITA No. 239/2011) Higher rate of depreciation allowed on windmills to bank in the capacity of lessor The taxpayer was a company engaged in business of banking. It had purchased windmills for a total price of INR 275.4 million that were put to use on 19 March 2004; depreciation was claimed on them at 80 percent, amounting to INR 110.1 million.The AO in its assessment order stated that the taxpayer, being a Banking organization, could not engage in any other business, such as generation of electricity, under the Banking Regulation Act. Further, depreciation at the higher rate was available only to those engaged in generation and distribution of electricity, which the taxpayer was not.The AO accordingly held that the transaction was a financing arrangement and hence disallowed the depreciation claim. The CIT(A) upheld this order. The AhmadabadTribunal allowed the appeal, relying on the Supreme Court ruling in ICDS Ltd. v. CIT [TS-8-SC-2013] and MumbaiTribunal ruling in Development Credit Bank Ltd
  4. 4. v. DCIT [ITA No. 300/Ahd/2001 and 4892/Ahd/2003].The Tribunal also relied on the ruling of the Coordinate Bench n the taxpayer’s earlier case for AY 2002-03 [ITA no. 2572/Ahd/2006] where it was held that it was not mandatory for the taxpayer to use the asset itself and that depreciation would be allowed as long as the asset was used for business purposes by the taxpayer. Further, as the leasing income from same assets was treated as business income, the requirement of Section 32 that the asset had to be used for the purposes of the business was held to be fulfilled. Accordingly, it was held that the taxpayer was eligible for the depreciation on its windmills. ACIT v. UTI Bank Ltd. [TS-468-ITAT-2013(Ahd)] Benevolent proviso to Section 201(1) inserted with effect from 1 July 2012 restricting a defaultingTDS deductor’s liability only to interest, applicable retrospectively. Payment of Waterfront Royalty to Gujarat Maritime Board to be subject to withholding tax under section 194J or 194I of the Act The taxpayer was developing, constructing, operating and maintaining a port on a Build, Own, Operate, Transfer (BOOT) basis. The taxpayer had been granted the right to use a water-front in pursuance of a Concession Agreement entered with the Gujarat Maritime Board (GMB) against payment of charges to be computed on the basis of actual throughputs achieved in the month. In the books of account the taxpayer had entered the impugned payment as ‘wharfage charges’ for AY 2006-07 and 2007-08. During the assessment proceedings, the AO noticed that the taxpayer had been deducting tax on waterfront royalty paid to GMB under Section 194J and not Section 194I. The AO therefore treated the taxpayer in default under Section 201(1) and also levied interest under Section 201(1A). On the issue of characterisation of payment, the Tribunal held that the payment shown by the taxpayer in its books of account as wharfage was, in substance, nothing but payment made for using the land together with a structure on the margin or shore of navigable waters alongside which vessels were brought to be conveniently loaded or unloaded. Waterfronts are part of land and therefore any payment in lieu of its use would squarely fall under the definition of rent as given in section 194I of the Act. In no case one could justify deduction of tax at source under Section 194J on the impugned payment. However, the Tribunal observed that Proviso to Section 201(1), inserted with effect from 1 July 2012, restricted the deductor’s liability to interest, when the deductee had offered income subject to TDS in his return of income and paid taxes thereon. The said proviso not only sought to rationalize the provisions relating to deduction of tax at source but was also beneficial in nature in that it sought to provide relief to the deductors of tax at source from the consequences flowing from non/short deduction of tax at source. As per the new proviso, on furnishing of a certificate by the Chartered Accountant, subject to certain conditions levied, the payer would not be held as an taxpayer in default under Section 201(1) and the payer would have to pay only the interest, if any, till the date of return of income filed by payee. Relying on CIT v. Chandulal Venichand & Ors [1994] 209 ITR 7 (Guj) and Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677 (SC), the Tribunal held that the above proviso would apply retrospectively to the case of taxpayer and set aside the matter to the file of the AO with a direction that the interest should be levied only till the date of return of income filed by deductee after due verification. Gujarat Pipavav Port Limited vs. ADIT [TS-408-ITAT-2013(Rjt)] Note: This case is argued by the KPMG in India Tax Dispute Resolutions team AO bound to follow DRP directions In instant case, the DRP vide its directions under Section 144C(5) directed the AO to tax the amount received by the taxpayer for services rendered under its International Transfer Agreement and Consultancy Services Agreement as ‘Fees for Technical Services’, holding that the taxpayer had made available technology to the Indian entity. However, the AO while passing the final assessment order continued to assess the above receipts as business income, ignoring the directions of the DRP. The taxpayer also filed rectification application before the AO, which was not disposed of, even though 3 years had lapsed from the date of the application. On appeal to the Tribunal, the Tribunal observed that the DRP had issued directions specifically mentioning that the amount received by the taxpayer had to be taxed as a Fee for Technical Services. The directions of the DRP were binding on the AO. Section 144C(13) uses the word ‘shall’ with regard to instructions to be followed by the AO. From the plain reading of the provisions of the section it was clear that AO had no choice but to pass an order as per the DRP’s directions. A panel consisting of three Senior Commissioners of the Income-tax Department, had been given powers to decide issues raised in the draft orders submitted by AOs. AOs, being lower in rank than the Commissioners in the departmental hierarchy, were supposed to follow the orders of the collegiums of the Commissioners. Secondly, the Panel had the benefit of the submissions of the taxpayers before it decides the issues. The application under Section 154 of the Act for rectification of the mistake was also filed by the taxpayer with the AO, vide a letter dated 23 November 2010 wherein the taxpayer brought to the notice of the AO its ‘inadvertent non-compliance’ with the DRP’s instructions. The taxpayer contended that the AO’s open defiance of the directions of the DRP, its non-disposal of the taxpayer’s application filed under Section 154 of the Act and the taxpayer’s request to direct the AO to follow the orders of the DRP, compelled the taxpayer to approach the Tribunal. Helplessness of the taxpayer is evident from the fact that it is ready not to press other grounds of appeal, if the AO is directed to act as per law. If even for its rightful claim an taxpayer has to approach a judicial forum, then it has to be held that AO had miserably failed in performing his duties. As a representative of the State, he is duty bound to collect only ‘due’ taxes and not only taxes. On two counts, behavior of the AO can be held to be perverse-first he did not obey the instructions of the panel, and second, he did not take any action with regard to the rectification application filed by the taxpayer. Accordingly, the Tribunal directed the AO to pass fresh assessment order as per the directions of the DRP within 30 days of receipt of the order. Diamond Management & Technology Consultants Ltd. v. ADIT [ITA No. 8978/Mum/2010 and ITA No. 9049/Mum/2010] Note: This case is argued by the KPMG in India Tax Dispute Resolutions team 4
  5. 5. 5 Mergers and acquisitions Decisions Section 50B of theAct dealing with slump sale not applicable to transfer of undertaking for non-monetory consideration The taxpayer transferred its manufacturing division to Novapan Industries Limited under the scheme of amalgamation. In consideration of the transfer, Novapan Industries issued shares of INR 62.8 million and transferred investments valued at INR 252.4 million to the taxpayer.The net worth of the taxpayer as on the effective date was INR 68.1 million.The taxpayer had filed a NIL return which was accepted by the AO. Under a reassessment proceeding, the AO treated the transfer as slump sale and applying Section 50B computed taxable gain to be INR 247.1 million.The CIT(A) deleted the addition. On departments appeal theTribunal held that as there is no monetary consideration for transfer of the manufacturing division, the transfer cannot be considered to be a slump sale within the meaning of Section 2(42C) and consequently Section 50B is not applicable. Amount received on account of delay in open offer process is capital gain, not interest income The taxpayer is a company incorporated in Mauritius holding shares in Castrol India Ltd. Castrol UK announced open offer for acquisition of 20 percent issued capital of Castrol India Ltd in March 2000.The open offer process was delayed on account of various regulatory issues. As a result, the taxpayer could offer its holding only in October 2001 which was accepted in November 2001 and purchase price along with interest from March 2000 to November, 2001 was received by the taxpayer. The taxpayer considered the interest payment as part of the sales consideration and claimed the resulting gain to be exempt under Article 13(4) of the India-MauritiusTreaty.The AO taxed the interest received as interest income.The CIT(A) upheld the contention of the AO. The receipt in the instant case is not an income arising from debt claim and there is no debtor-creditor relationship as per Article 11 of the treaty.The taxpayer further contended that additional consideration was received in respect of the period prior to the tender of the shares.Therefore there was no debt created in favor of the taxpayer. TheTribunal held that the interest was received due to delay in the process of open offer after its announcement and not due to delay in payment of consideration after acquiring the shares. Accordingly the additional amount received by the taxpayer was held to be part of consideration for computation of capital gain and not as interest income. Genesis Indian Investment Co. Ltd. v. CIT [I.T.A. No. 2878/ Mum/2006] SEBI Order in the matter of indirect acquisition of shares and voting rights ofVisa Steel Limited Mrs. Saroj Agarwal andVishambhar Saran (HUF) through chain of unlisted companies (Promoter Companies) were holding 75% of equity shares inVISA Steel Limited (VSL or the target company). It was proposed to partitionVishambhar Saran (HUF) and all the shares held by the HUF in the Promoter Companies were proposed to be transferred to Mrs. Saroj Agarwal.Thereafter, all the shares held by Mrs. Saroj Agarwal, including the shares received on partition of HUF, were to be transferred by way of gift to theVISA Group family foundation (the acquirer or the trust or the applicant).The beneficiaries of the trust are family members of Mrs. Saroj Agarwal either directly or through other trusts. Pursuant to the above transaction, the applicant would be able to indirectly exercise 75 percent shareholding and voting rights in the target company which triggers provisions of Regulation 3(1) read with Regulation 5 of the SEBI (Substantial Acquisition of Shares andTakeover) Regulation 2011 (Takeover Regulations). Therefore, the Acquirers sought exemption from applicability of regulation 3(1)/(2) of theTakeover Regulation on the following basis: • The proposed transactions involving indirect acquisition were for internal reorganisation of the shareholding of Agarwal family and not a commercial transaction. • There would be no change of control or management of the Target Company • There would be no change in the promoter group of the Target Company. • The proposed transaction would not result in any change in composition of the Board of Directors of the target company. • The indirect acquisition for which exemption is sought would not affect or prejudice the interests of the public shareholders of theTarget Company in any manner. Vide order dated 13 September, 2013, SEBI has granted exemption to the Acquirers from complying with the requirements of regulation 3(1) of theTakeovers Regulations. Circulars/Notifications/Press Releases CompaniesAct, 2013 With assent from the President of India on 29 August 2013, the Companies Bill 2012 has become the Companies Act, 2013.The Ministry of Corporate Affairs (MCA) further notified 98 sections of the Companies Act 2013 which has become effective from 12 September 2013. The draft rules under the Companies Act 2013 have also been released in two sets on 9 September 2013 and September 20, 2013. Public comments on the same have been invited within a period of one month for its respective release date. In all, rules relating to 22 chapters have already been released for public comments.
  6. 6. 6 Transfer Pricing Decisions PuneTribunal held that capacity under-utilisation adjustment could be claimed on the profit margin of the tested party so as to facilitate comparison with comparable uncontrolled entities The taxpayer was engaged in the manufacture of water heaters and sold them and spare parts for them for its associated enterprise (AE). In the first year of operations, the taxpayer was able to utilise only 21 percent of its installed capacity.The taxpayer determined the arm’s length price (ALP) of its international transactions usingTransactional Net Margin Method (TNMM) and compared its profit margin (after excluding fixed costs related to its start up phase and un-utilised capacity) with unrelated comparables.TheTransfer Pricing Officer (TPO) and the DRP denied the economic adjustments on the grounds that as per Rule 10B(1)(e)(iii) of the Rules, adjustments are permissible only on the margins of the comparables. TheTribunal held that as per Rule 10B(1)(e)(i) of the Rules, for determination of the ALP usingTNMM, the net profit margin of the enterprise realised from the international transaction was to be determined.This net profit margin was to be compared to the net profit margin of the taxpayer from uncontrolled transactions or to the net profit margins of comparable uncontrolled enterprises. Hence, the net profit margin of the tested party might be adjusted to facilitate its comparison to comparable uncontrolled entities or transactions as per Rule 10B(1)(e)(i) of the Rules itself. TheTribunal clarified that the lack of a specific provision to compute adjustments in the profit level indicator of the tested party in Rule 10B(1)(e)(iii) of the Rules did not bar a taxpayer from computing such an adjustment.TheTribunal upheld the capacity under-utilisation adjustment claimed by the taxpayer and restored the matter to the AO to verify the material submitted on the capacity utilisation of the comparables. AristonThermo India Ltd. v. DCIT (2013) [TS-221-ITAT- 2013(PUN)-TP] Premium profits earned by a distributor were adequate compensation for excessive advertising, marketing and promotion BMW India Pvt. Ltd. was engaged in the import of completely built units of BMW’s motor vehicles, related spare parts and accessories from its AEs and in assembling of completely knocked down kits of certain products imported from its AEs, for further resale in the Indian market.Taxpayer characterised itself as a distributor, also performing low-value added assembly functions and selected the Resale Price Method (RPM) as the primary method andTNMM as the secondary method to establish the arm’s length nature of its international transactions.TPO held that by incurring the advertising, marketing and promotion (AMP) expenditure over and above the bright line, the taxpayer provided brand promotion services to its AE and that it should have been compensated with the excessive AMP cost so incurred along with a mark-up of 15 percent. DRP upheld the same but directed exclusion of amounts pertaining to after-sales support costs and salesman bonus from the AMP calculation. Tribunal held that since the taxpayer was not an intervener in the proceedings before the Special Bench in the case of LG Electronics India Private Limited v. ACIT [2013] 140 ITD 41 (Del), it was not precluded from advancing arguments on facts and law which were either not addressed before the Special Bench or considered consequently by the Special Bench. However, theTribunal clarified that the Special Bench ruling would apply to the taxpayer wherever facts and laws so demand.TheTribunal held that the taxpayer in this case had performed more services than a normal distributor would and that the AMP activities performed by the taxpayer had contributed to the brand building for its AE.TheTribunal, in view of the Special Bench ruling, also held that brand building for the AE was an international transaction and that bright line was an accepted method for calculating non-routine AMP expenditure. It was also held that no further compensation was required to be made by the AE as the same has been received by way of the premium profits earned by the taxpayer and facts demonstrated that the compensation for higher marketing services was embedded in the pricing arrangement for import of goods.TheTribunal took a view that in absence of any provision under the Act, the revenue could not insist for direct compensation of the excessive AMP expenditure.The taxpayer is free to adjust and apply any method which it finds most suitable to manage its affairs. BMW India Pvt. Ltd. v. ACIT (ITA No. 5354/ Del/2012) Notifications/Circulars/Press releases Safe Harbour Rules notified To reduce increasing number of transfer pricing audits and prolonged disputes, the Central Board of DirectTaxes (CBDT) had issued the draft Safe Harbour rules (SHR) on 14 August 2013, inviting public comments.The final SHRs are notified on 19 September 2013 after considering the comments of various stakeholders.
  7. 7. Indirect tax ServiceTax - Decisions Service tax not leviable on cost material supplied free by service recipient to construction service provider In the instant case, the issue was whether the materials supplied free of cost (free supplies) by the service recipient to the construction service provider should be considered as part of taxable value, to be eligible to claim the benefit of Notification No 18/2005- ST (‘abatement notification’, in terms of which Service tax was payable on 33 percent of contract value). The DelhiTribunal held that the following essential elements should be present to include the value of the goods and materials supplied/ provided/ used by the service provider for determining the taxable value of a service: • The goods should belong to the service provider; • The service provider should have been charged towards the value of such goods; and • The service provider should have accrued some benefit/ profit by use of the goods. The DelhiTribunal held that in the absence of the above elements in the given case, the free supplies would not be includible in the gross amount charged within the meaning of Section 67 of the Finance Act, 1994 and therefore, were not liable to ServiceTax. Bhayana Builders (P) Ltd v. CST, Delhi and others [AIT-2013-155- CESTAT] Arrangement involving transfer of technology would not amount to ‘Franchise Service’ unless representational rights are granted In the instant case, the issue was whether the arrangement entailing transfer of technology for manufacture of goods would get covered under the taxable category of ‘Franchise Services’, even if the taxpayer did not grant any representational rights to sell or manufacture or provide services identified with the taxpayer. The MumbaiTribunal held that the key pre-requisite to qualify a service as ‘franchise’ service was that the franchisee should have been granted a representational right to sell or manufacture goods or to provide services or undertake any process identified with the franchisor, whether or not a trademark, service mark, trade name or logo or any such 7 Safe harbours for various sectors, shall be as under – Eligible InternationalTransaction Safe Harbour ratios Software development services (IT services) and Information Technology Enabled services (ITES), with insignificant risks • where the aggregate value of such transactions < INR 500 crores • where the aggregate value of such transactions > INR 500 crores Operating profit margin to operating expense • ≥ 20 percent • ≥ 22 percent. Knowledge processes outsourcing services (KPO services), with insignificant risks Operating profit margin to operating expense ≥ 25 per cent Intra-group loan to wholly owned subsidiary (WOS) where the amount of loan: • < INR 50 crores • > INR 50 crores Interest rate equal to or greater than the base rate of State Bank of India (SBI) as on 30th June of the relevant previous year: • plus 150 basis points • plus 300 basis points Explicit corporate guarantee to WOS where the amount guaranteed • < INR 100 crores • > INR 100 crores, and the credit rating of the borrower, by a SEBI registered agency is of the adequate to highest safety • Commission or fee of 2 per cent or more per annum • Commission or fee of 1.75 per cent or more per annum Specified contract research and development services (Contract R&D services), with insignificant risks, wholly or partly relating to software development Operating profit margin to operating expense ≥ 30 per cent Contract R&D services, with insignificant risks, wholly or partly relating to generic pharmaceutical drugs Operating profit margin to operating expense ≥ 29 per cent Manufacture and export of: • core auto components • non-core auto components where 90% or more of total turnover relates to Original Equipment Manufacturer sales Operating profit margin to operating expense: • ≥ 12 per cent • ≥ 8.5 per cent The final SHRs are applicable for a period of 5 years starting with assessment year (AY) 2013-14 for the prescribed sectors. The option of being governed by SHRs shall continue to remain in force for the period specified by the taxpayer in the prescribed form (Form No. 3CEFA) or a period of five years whichever is less.The taxpayer can opt-out of the safe harbour regime from the second year onwards, by filing a declaration to that effect with the AO. The Rules provide for a time bound procedure for determination of the eligibility of the taxpayer and of the international transactions for SHR. In case action is not taken by AO/TPO within the prescribed time lines, the option exercised by the taxpayer shall be treated as valid. The taxpayer shall also have a right to file an objection with the Commissioner against an adverse order regarding the eligibility of taxpayer/international transaction. Even where the taxpayer opts to be governed by the SHRs, they will be required to comply with the regulations regarding mandatory documentation and filing the Accountant’s report for each AY under consideration.
  8. 8. 8 symbol. In the instant case, the products were manufactured by the taxpayer using the licensed technology and marketed by them in their own name. Mere transfer of technology would not amount to granting representational rights to the taxpayer/sub licensees to sell or manufacture or provide service identified with the taxpayer. Hence the taxpayer would not be liable to pay Service tax under the taxable category ‘Franchise Services’. GlobalTransgene Ltd v. CCE [2013-TIOL-1259-CESTAT-MUM] Advance Ruling on provision of marketing and related support services to affiliate entities located outside India In the instant case, the issue was whether the provision of marketing and related support services from India to foreign affiliates located outside India, with respect to goods to be supplied by foreign affiliate entities to its India based customers, would qualify as ‘export’ under the Service tax law. The Authority for Advance Rulings (AAR) ruled that Rule 3 of the Place of Provision of Service Rules, 2012 would be relevant to the instant case which states that services would not be taxable if the service receiver was located outside India. Since the recipient of services in the present case (i.e. affiliate entities) was located outside India, the services would not be liable to Service tax. Tandus Flooring India Private Limited v. CST, Bangalore [AIT- 2013-146-AAR] Advance Ruling on applicability of Service tax on software supplies The applicant had sought an advance ruling regarding taxability of software supplies.The AAR inter alia ruled: • Software supplied in physical media would not be liable to ServiceTax; • Software supplied online would be liable to ServiceTax; • Grant of software licenses would be liable to ServiceTax; • Royalty payments made with respect to acquisition of rights to manufacture, replicate, license and sell software products would be liable to ServiceTax; • Payment made to an overseas entity for manufacture of applicant’s licensed products would not be liable to Service Tax; • Payments made for subscription-based loyalty programmes would be liable to Service tax. Notifications/Circulars/Press releases Exemption to specified services provided by National Skill Development Corporation Earlier, only certain approved vocational courses were exempted from the ServiceTax levy. Now, vide this Notification, the scope of the exemption has been further expanded to include courses which are approved by National Skill Development Corporation. Notification No. 13/2013-ST, dated 10 September 2013 Central Excise - Decisions CENVAT Credit on goods purchased and received into factory premises, but shipped to buyer without using it in factory premises The taxpayer entered into a contract for supply and installation of a sugar plant overseas. For the said purpose, the taxpayer manufactured certain machines in its own factory required for setting up such sugar plant and also, purchased certain machines from other manufacturers in India. The taxpayer availed CENVAT Credit on the machines purchased from other parties. Thereafter, the taxpayer transported the machines purchased from other parties along with the machines manufactured by the taxpayer to overseas for assembling it into a sugar plant. The Central Excise authorities have denied CENVAT Credit on the machines purchased by the taxpayer on the ground that such machines were transferred without being used within the factory premises. The Apex Court has held that to avail CENVAT Credit, the goods on which Excise duty was paid had to be used in the manufacture of the final product in the taxpayer’s factory.The machinery purchased by the taxpayer had not even been tested or was not even unwrapped in the factory of the taxpayer. Therefore, it could not be said that the machinery was used by the taxpayer in the manufacture of the sugar plant. Accordingly, CENVAT Credit could not be claimed on the items KCP Limited v. CCE [2013-TIOL-42-SC-CX] CENVAT Credit cannot be availed on after sale services provided by the dealers on behalf of manufacturers In the instant case, the taxpayer was engaged in the manufacture and sale of motor vehicles to various dealers. The dealers charged service tax for undertaking the service of vehicles during the warranty period.The taxpayer being manufacturer of motor vehicles availed CENVAT credit for ServiceTax charged by the dealers on the ground that the ServiceTax was an input service for the manufacture of motor vehicles. The Central Excise authorities denied CENVAT Credit on the ground that the activity undertaken by the dealer took place after the clearance of the vehicle from factory of production and, accordingly, was not an input service for their manufacture. The MumbaiTribunal held that when after-sale expenses (service charges of the dealers) were included in the assessable value of the vehicles sold, the taxpayer was entitled for credit of ServiceTax. However in this case, as per the terms and conditions of the dealer agreement entered into between the taxpayer and the dealer, the sale and service was at the cost of the dealer which indicated that the after-sale expense was not included in the assessable value of the vehicles sold by the taxpayer.Therefore, CENVAT Credit was not available. Mahindra and Mahindra Limited v. CCE [2013-TIOL-1304- CESTAT-MUM]
  9. 9. Notifications/Circulars/Press Release Clearance of goods without payment of duty against duty exemption scrips cannot be considered as clearance of exempted goods The Notification 29-33/2012-CE exempts certain manufactured goods when cleared against the specified duty credit scrip issued to an exporter. In this regard, the trade has represented that such clearances are being treated as clearances of exempted goods and payment of amount under Rule 6(3) of the CENVAT Credit Rules, 2004 is being demanded. In this background, CBEC has clarified that the debit of duty in these scrips is required to be treated as payment of duty and accordingly, the goods cleared without payment of duty against these scrips cannot be considered as clearance of exempted goods. Circular No. 973/07/2013-CX dated 04/09/2013 Customs - Decisions Sole distributor fee paid to vendor is not required to be added to the value of goods imported in certain cases In the instant case, the taxpayer paid sole distributor fee to the overseas vendor in addition to the value of goods imported. The customs authorities increased the assessable value of goods imported, to the extent of the sole distribution fee paid to the overseas vendor. The MumbaiTribunal held that the sole distributor fee paid was a constant amount throughout, irrespective of whether the taxpayer had made profit or loss in a given year, demonstrating that the said distribution right fee has no connection with sale proceeds or profits of the taxpayer. Accordingly, the sole distributor fee paid could not be added to the assessable value of the goods imported. Volkswagen Group Sales India Private Limited v. Comm. of Customs [2013-TIOL-1289-CESTAT-MUM] Notifications/Circulars/Press releases The CBEC has notified Customs Baggage Declaration Regulations, 2013, as per which all passengers who come to India shall declare their accompanied baggage in Form I appended to the said regulation. Notification No. 90/2013-Cust (NT) dated 29/08/2013 The Central Government has notified the revised All Industry Rates (AIR) of Duty Drawback. Notification No. 98/2013-Cus (NT) dated 14/09/2013 Flat Panel (LCD/LED/Plasma)Television cannot be imported as part of free baggage allowance with effect from 26/08/2013. Notification No. 84/2013-Cus (NT) dated 19/08/2013 9 Subsequent change in the Sales tax amount charged to the buyers, cannot be a reason to re-determine the assessable value for Excise duty In the instant case, the taxpayer cleared excisable goods to buyers and collected the Sales tax at prescribed rate.The said amount was not paid to the Sales tax department since the taxpayer had opted benefit under the Package Scheme of Incentives notified by the Government. Subsequently, the taxpayer decided to opt for the Scheme of pre-payment of deferred payment at net present value (NPV) introduced by the Sales tax department.The Central Excise authorities considered the difference between the amount of Sales tax collected from the buyers and the Sales tax paid to the Government as a an additional consideration and accordingly, demanded Excise duty on the same. The MumbaiTribunal held that such changes in the Sales tax liability cannot be a reason for re-determination of the assessable value of goods as such value was determined in accordance with the Central Excise legislation at the time of removal of goods and hence, Excise duty cannot be demanded on the differential value. Automag India Private Limited v. CCE [2013-TIOL-1275-CESTAT- MUM] Manufacture of dutiable and exempted final products out of the common inputs – exercising option for CENVAT Credit In the instant case, the taxpayer manufactured dutiable and exempted final products using common inputs for which CENVAT Credit was availed. With regard to CENVAT credit availment, two options have been laid down under Rule 6(3) of the CENVAT Credit Rules, 2004 viz. • Option 1 - reversing CENVAT credit availed on the inputs to the extent used in the manufacture of exempted products; or • Option 2 - pay an amount of 10 percent on the value of exempted products cleared. Since the relevant data relating to CENVAT credit attributable to the inputs used in the exempted products were not readily available during the beginning of the financial year, the taxpayer paid an amount of 10 percent on the value of exempted goods under option 2. However, after being able to collate the required data during the middle of the same financial year, the taxpayer opted for Option 1 i.e. reversing CENVAT credit on the inputs to the extent used in the manufacture of the exempted products. However, the Central Excise authorities raised an objection to the proposed change in the option by contending that during the middle of the financial year the option selected could not be changed. The KolkataTribunal held that merely discharging 10 percent of the price of the exempted goods due to non-availability of data at the beginning of the financial year would not disentitle the taxpayer in exercising their option of reversing the CENVAT credit relating to inputs to the extent used in the exempted products, later during the same financial year. TATA Steel Limited v. CCE [2013-TIOL-1287-CESTAT-KOL]
  10. 10. 10 VAT – Decisions Input tax credit on purchases made prior to publication of cancellation of registration of the selling dealer cannot be denied In the instant case, the issue involved was whether the taxpayer is entitled to avail input tax credit (ITC) on purchase from the a dealer whose registration had been cancelled by the department and whether the Commissioner had the power to detain goods and pass ‘stop delivery’ orders. The taxpayer was engaged in trading commodities and purchased goods from the selling dealer through the commodities exchange and availed ITC.The goods purchased by the taxpayer were stored in a warehouse during the sale transaction; even though the ownership changed the goods always remain stored at the same warehouse.The Department communicated with the taxpayer in October 2012 and denied ITC availed on the ground that the registration of the selling dealer had been cancelled by the authorities with effect from 1 January 2011.However the date of order for cancellation of registration was 6 March 2012.The authorities also detained the goods stored in the warehouse and passed a “stop delivery” order. Aggrieved by the order of Assistant Commissioner, the taxpayer filed a writ petition.The High Court held that the taxpayer had purchased the goods well before the declaration by the authorities as to cancellation of registration of the selling dealer. Hence, the taxpayer was entitled to avail ITC. Any purchase made from such dealer after the necessary particulars were published would not qualify for tax credit.There was no reason to believe that the tax on such goods was or was likely to be evaded.The Commissioner had power only to enter the vehicle, vessel or place and inspect the goods and records relating to the goods in question and elicit such information as was relevant.Therefore, there was no power available with the Assistant Commissioner for passing stop delivery order. Therefore, the order was illegal and quashed. MeetTraders v. State of Gujarat and Another [2013] 63VST 246 (Guj) Notifications/Circulars/Press Release Delhi The circular states that Form ‘C’ is being issued online from the year 2012-2013, based on the sale and purchase details filed in Annexure 2A and 2B along with the return. Further, Form ‘C’ for the FinancialYear 2011-12 and earlier years would also be issued electronically. However, the purchase details in Annexure 2A are not available with the department for earlier years. Accordingly, the same are required to be furnished by the dealers for earlier years as per the process prescribed in the circular. Circular No. 13 of 2013-14 F.3 (310)/Policy/VAT/2013/664-669 dated 23 August 2013 Maharashtra Form 704 i.e. Audit Report to be filed in the State of Maharashtra has been amended by way of deleting the following Annexures: • Annexure J - 3 i.e. ‘Details of Customer wise Debit Note or Credit note’; and • Annexures J - 4 i.e. ‘Details of Supplier wise Debit Note or Credit Note’. In the erstwhile Form, the gross amounts (excluding values of Debit notes and Credit notes) were required to be disclosed and the details of Debit notes and Credit Notes were required to be mentioned separately in Annexure J - 3 and J – 4. However, in the amended Form 704, values in Annexures J - 1 and J – 2 (customer wiseVAT sale and supplier wise VAT purchases) should be disclosed after giving effects to the Debit notes and Credit Notes i.e. Net amounts should be mentioned in Annexures J - 1 and J - 2. Notification NoVAT/AMD-2013/1B/Adm–8 dated 23 August, 2013 Andhra Pradesh The date of implementation of mandatory usage of e-way bill byVAT dealers has been extended from 1 October 2013 to 1 December 2013. Circular No CCT’s Ref. No. CS (1)/39/2013Dated: 6th September, 2013 Karnataka The notification has prescribed the detailed step by step procedure for generation of Form C online for dealer registered under the Central SalesTax Act, 1956 and who has electronically filed returns with immediate effect. Notification No CCW/CR.8 / 2013-14 Dated: 21st August, 2013 Himachal Pradesh With effect from 10 September 2013, every registered dealer who sells/dispatches goods worth INR 30,000 or more to any purchaser, within the State is required to furnish a declaration regarding tax invoice/bill/cash memo before dispatch of goods in FormVAT-XXVI electronically. However, in case of movement of goods involving re-entry into the State the declaration in FormVAT-XXVIA will suffice provided the declarations are made before the dispatch of such goods. Notification No EXN- F(10)-7/2011 Part-I Dated 10th September, 2013 Manufacturers/dealers dealing in sale of medicines, electrical items, edible oils, marble, furniture and timber have been notified for the purpose of making compulsory e-declaration with effect from 1 October 2013 in FormVAT-XXVI before the dispatch of taxable goods in the course of intra-state transactions of goods. Notification No EXN- F(10)-7/2011 Part-I Dated 10th September, 2013 Assam With effect from 13 September 2013, the rate of tax for the goods falling under the Fifth Schedule has been increased from 13.5 percent to 14.5 percent. Notification No.FTX.55/2005/Pt/197 Dated 12th Sep, 2013
  11. 11. • Exemption from Social Security Contribution in the host country (Detachment); • Totalization of contributory periods; • Export of Benefits. The circular also clarifies that an employee may apply for the COC through his employer in the prescribed format and submit it to the jurisdictional Regional Provident Fund commissioner (RPFC). After verification of details, the COC will issued by the RPFC. The signing of the India-Republic of Hungary SSA is a welcome step: it will result in cost savings and social protection of international assignees in respect of deputation arrangement for employees, which in turn will lead to an increase in economic activity between the two countries. Employees’ Provident Fund Organisation directs its field offices to expedite exemption applications of private PF Trusts The Indian Government has permitted employers to establish and manage their own private PFTrusts, subject to conditions prescribed under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act). Private PF trusts became attractive because they promised faster settlements of employee claims as well as greater transparency regarding PF accumulations. However, it was important that such private PFTrusts were recognized under the Act for employees to get tax benefits. As approvals are required under both the Act and the EPF Act to run a recognized provident fund trust, companies that do not have approvals under the EPF Act are required by the Finance Act, 2013 to obtain the approval by 31 March 2014. This timeline has been extended several times in the past. In the above context, Employees’ Provident Fund Organisation (EPFO) has now directed its officers to expedite the disposal of pending applications asking them to send the pending application to the Head Office (New Delhi) by 15 November, 2013 after ensuring that the application is proper. Income-tax Act, 1961 (the Act). Multiple stage grossing up would not be applicable in the case of expatriates exemption benefit under section 10(10CC). Hypothetical tax deducted from the salary income of the expatriate employees under a scheme of tax equalization, is not taxable in their hands. Tax Consultant’s fees paid by the employer, as per company policies, for ensuring proper expatriate tax compliances for the expatriates was held not taxable in the hands of the expatriate employees. With the deadline of 31 March 2014 close, those companies who fail to obtain exemption under the EPF Act may lose their recognition under the IncomeTax Act.This could have an adverse tax impact for their employees. Since the PF office is providing an impetus to the approval process for private PF trusts, companies running such trusts may utilize this opportunity to get timely approval for their PF trusts. 11 Personal taxation Decisions/ Notification/ Circular/ Press releases/ Publications Delhi High Court rules that canteen allowance has to be considered for computation of provident fund liability Provident Fund contributions under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) are due on the basic wages, dearness allowance (including the cash value of any food concession) and retaining allowance. The Delhi High Court in the case ofWhirlpool of India Limited (Petitioner) vs. Regional Provident Fund Commissioner (RPFC) held that ‘canteen allowance’ would be treated as part of ‘BasicWages’ under the EPF Act and accordingly, provident fund (PF) contributions were liable on such allowances. The above order is a significant ruling by Delhi High Court and lays down important principles on the salary components that will form part of basic wages for the determination of PF contributions. Since this ruling has been circulated to the field offices by the EPFO Corporate Headquarters with an advice to use it for dealing with similar issues, there may be a greater scrutiny by the PF department of the allowances paid by companies for ascertaining correct PF contributions. KPMG in India organizes a webinar with the Central Provident Fund Commissioner on Employees’ Provident FundsAct KPMG in India organized a knowledge-sharing interactive webinar on 10 September 2013 on Recent Developments in Employees’ Provident Funds Act where the top brass of Employees’ Provident Fund Organisation including its Chief Executive, Mr. K. K. Jalan, answered a broad range of questions from the audience. This webinar on provident funds was a good opportunity for participants to connect directly with senior regulators, who answered a broad range of live questions from the audience Social SecurityAgreement between India and Republic of Hungary comes into effect India signed a Social Security Agreement (SSA) with the Republic of Hungary on 02 February 2010.The Indian authorities have now issued a circular notifying that the SSA with Republic of Hungary will be effective from 01 April 2013. The SSA between India and Republic of Hungary envisages the following benefits:
  12. 12. Contact us Hiten Kotak Co-Head ofTax T: +91 (22) 3090 2702 E: Punit Shah Co-Head ofTax T: +91 (22) 3090 2681 E: GirishVanvari Co-Head ofTax T: +91 (22) 3090 1910 E: The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity“ are registered trademarks or trademarks of KPMG International. Ahmedabad Safal Profitaire B4 3rd Floor, Corporate Road, Opp. Auda Garden, Prahlad Nagar Ahmedabad – 380 015 Tel: +91 79 4040 2200 Fax: +91 79 4040 2244 Bangalore Maruthi Info-Tech Centre 11-12/1, Inner Ring Road Koramangala, Bangalore 560 071 Tel: +91 80 3980 6000 Fax: +91 80 3980 6999 Chandigarh SCO 22-23 (Ist Floor) Sector 8C, Madhya Marg Chandigarh 160 009 Tel: +91 172 393 5777/781 Fax: +91 172 393 5780 Chennai No.10, Mahatma Gandhi Road Nungambakkam Chennai 600 034 Tel: +91 44 3914 5000 Fax: +91 44 3914 5999 Delhi Building No.10, 8th Floor DLF Cyber City, Phase II Gurgaon, Haryana 122 002 Tel: +91 124 307 4000 Fax: +91 124 254 9101 Hyderabad 8-2-618/2 Reliance Humsafar, 4th Floor Road No.11, Banjara Hills Hyderabad 500 034 Tel: +91 40 3046 5000 Fax: +91 40 3046 5299 Kochi 4/F, Palal Towers M. G. Road, Ravipuram, Kochi 682 016 Tel: +91 484 302 7000 Fax: +91 484 302 7001 Kolkata Infinity Benchmark, Plot No. G-1 10th Floor, Block – EP & GP, Sector V Salt Lake City, Kolkata 700 091 Tel: +91 33 44034000 Fax: +91 33 44034199 Mumbai Lodha Excelus, Apollo Mills N. M. Joshi Marg Mahalaxmi, Mumbai 400 011 Tel: +91 22 3989 6000 Fax: +91 22 3983 6000 Pune 703, Godrej Castlemaine Bund Garden Pune 411 001 Tel: +91 20 3058 5764/65 Fax: +91 20 3058 5775 KPMG in India