Daily Archives: April 1, 2012

SEPCO III Electric Power Construction Corporation, In re (2012) 342 ITR 313 (AAR) The applicant was a Chinese company engaged in the business of supplying equipment for electric power projects. An Indian company awarded contract to the applicant for offshore supply. The scope of the work required the applicant to carry out design, engineering, procuring and transportation of the equipment for a thermal power plant to the port of loading. The applicant claimed that:  

Offshore supply of equipment under the offshore supply contract not taxable u/s 9

Farida Holdings (P.) Ltd. v Deputy Commissioner of Income-tax [2012] 21 taxmann.com 462 (Chennai – Trib.) The assessee is a private limited company, mainly functioning in the role of a holding company over a number of hundred-percent subsidiary companies. The assessee company is exercising administrative control over the subsidiaries in its status as holding company. In that status the assessee company is also managing the financial affairs of its subsidiaries. The assessee company is monitoring the inflows and outflows of the subsidiary companies in its attempt to utilize the available funds to the maximum advantage of the group companies. The Assessing Officer found that the assessee company had received loan amounts from different subsidiaries and those borrowed funds were in turn advanced to other subsidiaries. According to the assessing authority, the loans obtained by the assessee from its subsidiaries were in the nature of deemed dividends as per section 2(22)(e) of the Income-tax Act, 1961 and, therefore, liable to be taxed.

No deemed dividend on advances made by Subsidiary Co where Holding Co advances the same ...