With the fast developing of world economy including of Indian economy which is slated to be fastest in the world, the deepest impact of said development is specially be felt in the corporate taxation whose complexities are getting more and more grave and such rapid changes which are on such a fast pace, the level of anxieties among the majority of world economy is clearly discernible from the agendas of most premium gatherings of the world leaders like G-20, G-6 etc as well as in OECD where direct taxation issue is hogging the top lime light with increasing concern among the nations to augment the direct tax base as well as to prevent the tax evasion by the multinational companies availing the loopholes in the taxation laws. India become the abode of highest number of registered companies and having a huge international business dealings is now the most active members among OECD addressing many problems being faced by the income tax department on dealing with the corporate taxation. Although the tentacles of income tax having such omnipresence in every sphere of economic activities of national and international and despite of multi heads of taxation, corporate taxation is gradually is taking a special niche among all other heads and litigations before various ITAT benches, High courts and in apex court have a crowding looking with pouring of thousands of litigation on corporate taxation specially.
Now for the new comers in the taxation practice followings issues should be brushed up in the light of upcoming several judicial pronouncements as well as the old as such:
1 DIVIDEND TAX- With the change of law thus shifting the taxation from the hands of dividend receivers to the paying companies, this issue has assumed a new significance in corporate taxation.
2 RESIDENTIAL STATUS, PE AND DTTA- This three issues are the subject matters in most international taxation litigations. DTTA among these held a special status in taxation having superced power over the ACT which is a great exception of legal jurisprudence with settled law that no circular, rules, notifications or instructions having overriding power over the parent ACT. PE issue is very crucial on determination of taxability of a resident or non resident company.
3 TECHNICALL FEES AND ROYALTY- This is also the matter of litigations in majority of international taxation cases and Section 9 is one of most debated section in the Income tax law.
4 DEEMED DIVIDEND- This issue is totally concerned with the domestic companies and many litigations are generated from this issue as it is an anti tax evasion measure of the department.
5 SHARE CAPITAL- This is also the most litigated issue particulary after the amendment of Section 68 the onus is on companies to prove the sources of their share capital introduction and most reopening cases u/s 147 are related with this matter.
6 PENNY STOCK- This issue has recently has assumed a special significance in view of detection of large number of share price rigging by the entry operators in the stock market by the Investigation wing of the department. However with the amendment of section 10(38) the scope of converting black money to white by the long term capital gain is buried forever and further arising of penny stock cases are nil.
7 MAT- This issue has great significance on perinial dispute between the assesses and the department on method of determination of profit and method of accounting and is the cause of numerous litigations.
8 CAPITAL GAIN- This issue has assumed special significance after the historic VODA PHONE cases through out the many benches of tribunal, High courts and in apex court on sell and acquisition of shares of domestic companies by the offshore companies or funds.
8 DOUBLE TAXATION- This is one of most contentious issue and is governed by section 90 as well by DTTA both.
Apart from there are many common issues like stock discrepancy, bogus purchase, survey, search, unexplained investment, unexplained money litigations are dotting the corporate taxation.
Moreover in coming years we will see many drastic changes in corporate taxation field as such stringent measure to prevent the shifting of taxation base by the off shore companies and joint cooperation by the OECD nations to prevent the tax evasion by the corporate in international taxation.
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