Dear Readers, We are pleased to present the first fortnight edition of TransPrice Times for May 2016. The issue includes a summary on the most spoken about amendments to India - Mauritius treaty and other important case laws in the Transfer Pricing arena. We hope you find this newsletter both timely and useful, and we look forward to your feedback and suggestions to improve it further. You can write to us at akshaykenkre@transprice.in Happy reading !!!

1. TransPrice Times
Edition: 1st
– 15th
May 2016
Contact us: Gita Building, 2nd
Floor, Plot No. 92, Next to HP Petrol Pump, Sion East, Mumbai – 400022
Tel: 022-24097171; Mobile: +91 9819245424; email: akshaykenkre@transprice.in
RECENT NEWS:
Much awaited India-Mauritius Double Taxation
Avoidance Agreements (DTAA) amended to
include the following important highlights:
(i) Insertion of new Article 12A to provide
source based taxation of Fees for
Technical Services (FTS) @10% on gross
basis. FTS definition similar to Indian
domestic tax law
(ii) Inclusion of Service Permanent
Establishment (PE) clause to include
furnishing of services by an employer
enterprise for periods aggregating more
than 90 days within any 12-month
period
(iii) With effect from April 1, 2017, India
gets right to tax capital gains on
alienation of shares in a company
resident in India
(iv) For capital gains on alienation of shares
between April 1, 2017 to March 31,
2019, the tax rate would be limited to
50% of the domestic tax rates in India
subject to the LOB clause
(v) Article 11 for Interest amended to
remove earlier exemption on interest
received by banks in source state and
tax source state at 7.5% of gross
interest when beneficiary of such
interest is resident of other contracting
state
(vi) Amends the Exchange of Information
article (EOI) to be in line with
International standards
6 countries sign CbC Multilateral
Agreement
India including China, Iceland, Israel, New
Zealand and Canada sign Multilateral
Agreement to facilitate automatic exchange of
CbC (Country-by-Country) reporting and boost
transparency by MNEs.
Gruner India Pvt Ltd – ITAT -
Delhi
Outcome: Against taxpayer
Category: Royalty & FTS
The Tax Court upheld that payment for royalty
and fees for technical services (FTS) are two
separate international transactions with
peculiar nature rather than ‘closely linked’ as
considered by the taxpayer. In general parlance
too royalty is paid for the use or right to use an
intangible and an FTS for paid for provision of
service. Hence, every international transaction
has to be benchmarked separately unless they
are belonging to a same class of transaction.
NTT DATA Global Delivery
Services Ltd – ITAT - Bangalore
Outcome: Against taxpayer
Category: Merger
With respect to finding functionally similar
companies for benchmarking purposes, it is
ruled by the Tax Court that a merger itself does
not imply an exclusion from final set of
comparables when amalgamated company is
functionally similar to tested party activities.
Further, reference was placed on the decision
of M/s Willis Processing Services (India) Pvt Ltd
(TS-49-ITAT-2013(Mum)-TP)