Liability Of a Limited Company

PRESENTATION on

DOING BUSINESSIN INDIA

Registered office: SCO 35, Second Floor, Sector -26, Chandigarh

160 019Tel- 91-172-2790366, 2790075, Fax-91-172-

2790260, Mobile-09814011278Email: [email protected]

WELCOME

ABOUT ARA ARA is a firm of chartered accountants.

ARA firm was formed in the 1988 (22 years).

ARA firm provide Services in the area of Audit, Tax (Direct, indirect) and Advisory.

ARA team is comprised of more than 25 multi displined professionals such as Chartered Accountants, Company Secretary, Lawyers, Cost Accountants and MBA’s.

ARA have state of the art facility in Chandigarh, New Delhi & Pune.

ARA have more then 100 Corporate Clients and leading MNC’s (for USA, UK, Japan, Middle East, Europe).

Mr. Raman Aggarwal, the CEO & Founder empanelled with the “Office of Official Liquidator” attached with the High Court of Punjab, Haryana and Chandigarh. An Auditor for conducting Special Audits approved by the Tax Authorities.

Nominated to the “Regional Direct Taxes Advisory Council”.

Member of “The Institute of Internal Auditors”, Inc., Florida, USA, “International Fiscal Association” Netherlands and “PHD Chambers of Commerce & Industry”, Confederation of Indian Industry.

SERVICES & SOLUTIONS AUDIT AND ASSURANCE

TAX & REGULATORY SERVICES

SPECIALITY SERVICES

Setting up New Business Incorporation of a Limited Company Setting up of STPI Unit and Maintenance Setting up of SEZ UNIT and Maintenance Doing Business in India Doing Business Outside India Setting up Offshore Companies International Executive Services Business Registrations Intellectual Property Payroll Services Corporate Secretarial Services Virtual Office Services KPO-Accounts and Tax Outsource Services

INTERNATINOL TAXATION

FINANCIAL ADVISORY SERVICES

LEGAL SERVICES

OUTSOURCING SERVICES

TEAMS.NO NAME QUALIFICATION EXPERIENCE

1 Mr. Raman Aggarwal Fellow Chartered Accountant

25 Years in Accounts, Finance, Tax, Legal, Management etc.

2 Mrs. Simpy Gupta Bachelor in Law. & Company Secretary

15 Years in Legal & Corporate affairs

3 Mr. Sameer Sawrup Fellow Chartered Accountant

16 Years in Accounts, Finance, Tax, Legal, Management etc

4 Mr. Unni Krishnan Graduate 18 Years experience in Corporate Affairs

5 Ms. Arti Post Graduate 9 years experience in Regulatory Compliances

6 Mr. Sanjay Aggarwal Chartered Accountant 18 Years Accounts, Finance & Tax

7 Mr. Suman Master in Commerce 14 Years in Accounts, Finance, Tax, Legal, Management etc

8 Mr. Vineet Thakral Master in Law & Management

2 Years Tax and Regulatory

9 Ms. Manmeet Kaur Masters in Law 3 Years Legal

10 Mr. Nikhil Vats Bachelor in Law 2 Years Legal

11 Ms. Neelam Bachelor in Law 3 Years Legal

12 Ms. Moonu Rana Bachelor in Law 2 Years Legal

More than 15 other Professionally Qualified Support Staff

DOING BUSINESS IN INDIA

FOREIGN DIRECT INVESTMENT IN INDIA

AUTOMATIC ROUTE

APPROVAL ROUTE

ENTRY STRATEGY

JOINT VENTURE

WHOLLY OWNED SUBSIDIARY

BRANCH OFFICE

AGENCY

FORMS OF ENTERPRISES IN INDIA

INCORPORATED ENTITY

Private Limited Company

Public Limited Company

UNINCORPORATED ENTITIES

Branch Office

Liaison Office

Project Office

Partnership

Trust

TYPE OF SECURITIES

Equity Share

Preference Share

Debenture

LAWS GOVERNING BUSINESS IN INDIA

The Companies Act. 1956 Arbitration Reconciliation Act, 1996 The Competition Act, 2002 The Foreign Exchange Management Act, 1999 Income Tax Act, 1961 Central Sales Tax, 1956 Central Excise Act, 1944 Information Technology Act, 2000 Copyright Act, 1957 Geographical Indications of Goods Act, 1999 Indian Patents Act, 1970 Designs Act, 2000 Industrial Disputes Act, 1947 Workmen Compensation Act, 1956 Employees Provident Fund Miscellaneous Provisions Act,

1952 Consumer Protection Act, 1956

IMPORTANT REGULATORY AUTHORITIES FOR FOREIGN

INVESTMENT Secretariat for Industrial Assistance (SIA)

Foreign Investment Promotion Board (FIPB)

The Foreign Investment Implementation Authority (FIIA)

Reserve Bank of India (RBI)

Registrar of Companies (RoC)

Securities and Exchange Board of India (SEBI)

Central Board of Excise and Customs (CBEC)

Central Board of Direct Taxes (CBDT)

Authority for Advance Rulings (AAR)

Investment Commission

DIRECT TAXES

INCOME TAX

DIVIDEND DISTRIBUTION TAX

INDIRECT TAX Customs duty

CENVAT (excise duty)

Central Sales tax

Value added tax

Service tax

Octroi duty/entry tax

Stamp Duty

R&D cess

Works contract tax

Turnover tax

Purchase tax

Secondary and higher education cess

INTERNATIONAL TAX TREATIES

Treaties with favorable jurisdictions such as Mauritius, Cyprus, Singapore and the Netherlands

India has entered double tax treaty with 79 Countries

IMPORTANT HR STATUTES

TRAINING, RECRUITMENT AND SCREENING

Employment exchanges (Compulsory notification of vacancies) act, 1959

The payment of gratuity act, 1972

The apprentices act, 1961

Contract labour (regulation and abolition) act, 1970

Child labour (prohibition and regulation) act, 1986

PAY, SALARY AND BONUS

Minimum wages act, 1948

Payment of wages act, 1936

Equal remuneration act, 1976

Payment of bonus act, 1965

COND Next Slide……

EMPLOYMET TERMS, CONDITIONS AND BENEFITS

Factories act, 1948

Shops and commercial establishments acts

Industrial employment (Standing orders) act, 1946

Maternity benefit act, 1961

SOCIAL SECURITY, INSURANCE AND COMPENSATION

Employees’ provident funds and miscellaneous act, 1952 (“epf act”)

Employees’ state insurance act, 1948 (“esi act”)

Workmen’s compensation act, 1923

Disputes and liabilities

Industrial disputes act, 1947

Employer’s liability act, 1938

INTELLECTUAL PROPERTY

Patents

Copy Rights

Trade Marks

Trade Secretes

Geographical indication of goods

ACCOUNTS AND AUDIT

Indian Accounting Standards

Audit and Assurance Standards

Guidance notes

Standards on internal audit

Opinion of expert advisory of ICAI

IFRS to be implemented in 2011

REPORTING REQUIREMENTS

INCOME TAX

Annual Tax Return

Quarterly withholding tax return

Accountant report under of transfer pricing rule

Tax audit report

Accountant report in case of MAT

Accountant report in case of STPI/EOU/SEZ

COMPANY LAW

Filling of annual audited financial statements

Filling of annual return

Filling of documents in case of

Change of Director Change of Capital Change of Registered Office Registration of Charge

EXCHANGE CONTROL LAW/RBI

Intimation to RBI from receipt of capital

Intimation to RBI from the date of allotment of shares

Annual return to RBI

SERVICE TAX LAW

Monthly deposit of tax

Half yearly tax return

Refund of Service Tax within 1 year

STPI

Monthly progress report

Annual return

Filling of Softex form

Reimbursement of CST on half yearly basis

VAT/CST

Monthly/Quarterly return

Annual return

EXTRACTION OF EARNINGS OUT OF INDIA

Dividend

Buyback

Redemption

EXIT STRATEGY

Dissolution of company

Sale of share

Merger/Amalgamation

IPO

INCOME TAX LAW AT A GLANCE

IN INDIA

INCOME TAX AT A GLANCE

CHARGEABILITY

Income arising or accruing or receiving in India including specified deeming income

TAX RULE

Resident Rule Source Rule

TAX PAYER TYPE

Residents Non Residents Resident but not Ordinarily Resident


SCOPE

Worldwide Income Taxable in case of Resident Indian Sourced Income Taxable in case of Non Resident Worldwide Income except Business Income Taxable in case of Resident

but not Ordinarily Resident

PERIOD

12 months period from 1st April to 31st March (Accounting Year) Law as exists in next year applicable (Assessment Year)

CLASSIFICATION AND COMPUTATION OF INCOME

Income is classified as below and then computed according to the procedure specified for each classification

SALARY HOUSE PROP0ERTY BUSINESS/PROFESSION CAPITAL GAIN OTHER SOURCES (RESIDUARY)


EXEMPTIONS AND DEDUCTIONS

Various specified exemptions and deductions are allowed based on various incentive schemes

MODE OF TAX PAYMENT

Self Assessment (at the time of filing tax return) Advance Tax ( 3 to 4 installments on estimated basis) TDS (deposited by buyer on behalf)

WITHHOLDING TAXES

Certain specified transactions are subject to withholding taxes

FILING REQUIREMENTS

31st July (In case of Individual) 30th Sept. (In case of corporation or non corporation if

turnover exceeds 6 million) Revised return within 1 year from end of A/Y


ASSESSMENT PROCEDURE

Accepted as such (If not selected for audit within six months from the end of A/Y )

Selected for Scrutiny (Audit)

TIME PERIOD FOR ASSESSMENT

1 year from the end of A/Y if not selected for Audit 2 years from the end of A/Y if selected for Audit

REASSESSMENT PROCEDURE

If income escaped taxation or wrong information by tax payer within 4/6 years from the end of A/Y

TIME PERIOD FOR REASSESSMENT

9 months from the end of the F/Y in which notice is served

RECTIFICATION OF ORDER

Within 4 years from the end of the F/Y in which order is passed or 6 months from the end of the month in which rectification application is received


REVISION OF ORDER BY COMMISSIONER

Within 2 years from the end of the F/Y in which order was passed

REVISION OF ORDER BY COMMISSIONER IF TAX PAYER REQUESTED

Within 1 year from the end of the F/Y in which order was passed

REFUND

Tax payer is entitled to refund of excess tax deposited with interest @ 6% per annum

INTEREST

Interest @ 12% per annum for delay in filing return, deposit of tax etc.


PENALTIES

Maximum 300% of tax amount

PROSECUTION

Willful attempt to evade tax Willful failure to file tax return Willful failure to file documents and accounts Falsification of books of accounts and documents False statements False returns Willful non compliance

PUNISHMENT

Imprisonment ranges from 6 months to 7 years with fine or without fine subject to trial in the court

Appellant Authorities

There are 4 level of appellant authorities :-

1) Commissioner of Income Tax (within Tax dept)

2) Income Tax Appellant Tribunal (Lower Court)

3) High Court

4) Supreme Court of India

WEALTH TAX

IF TAXABLE WEALTH EXCEEDS RS. 3 MILLION

WEALTH TAX @ 1.03%

INCOME TAX TABLE

Domestic Company 33.99%

Foreign Company 42.23%

Dividend distribution tax 16.995%

Capital gains tax on exit or restructuring

0% to 42.23% (long/short term)

Withholding Taxes Nagging problems

Minimum Alternate Tax Domestic companies: raised from 11.33% to 16.995%Foreign companies: raised from 10.558% to 15.836%

NEW DIRECT TAX CODE

TAXATION OF COMPANIES:

• Companies: 25%• Branch profit tax: 15%

GAAR Introduce

Treaty Override Introduced

Short Term/Long Term Capital gains @ 30%

Residence rule for companies: Place of control and management, wholly or partly in India, at any time in the year

Wealth tax @ 0.25% (basic exemption USD 10 Millions)

TAX RATE COMPARISION

Corporate Income Tax Rate

30% 25%

Minimum Alternative Tax

15% (of book profits)

2% of gross assets

Capital Gains 0% - 40% 30%

Branch Profit Tax 0% 15%

Withholding Taxes(payments to non-residents)

Dividends 0%(DDT of 15% is applicable)

0% (DDT of 15% is applicable)

Interest 10% - 40% 20%

Royalty 10% 20% (on gross basis)

Service and Management

10% 20% (on gross basis)

INTERNATIONAL TAXATION AT A

GLANCE

INTERNATIONAL TAX AT A GLANCE

All payments in the nature of chargeable income subject to Withholding Tax.

Withholding Tax rate as stated in either Treaty or Domestic Tax Law which is more beneficial to tax payer.

Provisions to lower Withholding Tax rate in Indian Tax Law.

Indian Party making payment of income to Non Resident or Business Connection or Employer treated as “Representative Assesses” (Agent).

Income from “Permanent Establishment” is always on Tax Authority’s Radar.

Underlying Tax Credit available to US Corporations not Individuals.

DOUBLE TAXATION TREATY BETWEEN INDIA & USA

RATE

DIVIDEND NIL

INTEREST 10-15%

ROYALTY 10% in case of use of Industrial, Commercial and Scientific Equipment

15% if payer is Government or Specified Organization20% in other Cases

FEE FOR INCLUDED 10% in case of use of Technical or Consulting SERVICES Services, Ancillary & Subsidiary to Industrial, Commercial and Scientific Equipment

15% if payer is Government or Specified Organization20% in other Cases

TRANSFER PRICING LAW IN

INDIA

INTRODUCTION TO TRANSFER PRICING

In India, Transfer Pricing regulations were introduced from April 1,2001as a measure to curb tax avoidance.

Any Income arising from an international transaction to be computedat the arm’s length price (ALP).

The Central Board of Direct Taxes has set up a separate cell for dealingwith cases of transfer pricing

SOURCE

OECD guidelines

US regulations and jurisprudence

Indian jurisprudence

ARM’S LENGTH PRINCIPLE

“Where an enterprise enters into transactions with associated enterprises, in order to determine fair profit of that enterprise, the price of the transactions should be compared with those entered into by two independent enterprise under uncontrolled conditions and under similar circumstances.”

APPLICABILITY

INTERNATIONAL TRANSACTIONS

ASSOCIATED ENTERPRISES

Purchase

Sale

Lease of tangible or intangible property

Provision of services

Lending or borrowing money or

Any other transaction having a bearing on the profits, income, losses or Assets of such enterprise.

INTERNATIONAL TRANSACTIONS

ASSOCIATED ENTERPRISES

PRIMARY ASSOCIATION

Management/Control/Capital

SECONDARY ASSOCIATION

Direct or indirect voting power of at least 26%

Common parent holds voting power of at least 26% in both

Loan of 51% or more of value of assets

Guarantee of 10% or more of total borrowings

One appoints more than half of directions on board or one executive director of other

Common parent appoints more than half of directors on board or executive director in both

Whole dependence on use of IPR’s of the other

Buying of bulk raw materials, Sales to one party etc.

STEPS FOR DETERMINATION OF ALP

STEPS INVOLVED IN THE DETERMINATION OF THE ALP:

Identification of the “International Transaction”

Identification of an “Uncontrolled Transaction”

Identification and comparison of specific characteristics of the two transactions (Comparability) as per Rule 10A and 10B. Finding out whether differences, if any, between the two transactions can be reconciled/resolved

Ascertaining the most appropriate method

Determination of the arm’s length price by applying the method chosen.

METHODS The specific methods prescribed for computing arm’slength price, which are as follows:

TRADITIONAL TRANSACTION METHOD

TRANSACTIONAL PROFIT METHOD

TRADITIONAL TRANSACTION METHOD

COMPARABLE UNCONTROLLED PRICE METHOD: Under this method, the first step is to identify the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction. Then such price is to be adjusted on account of differences, which could materially affect the price in the open market, if any, between the transactions being compared or between the enterprises entering into such transaction. Such adjusted price can be called as arm’s length price computed under this method. This method involves comparison of prices both internal and external.

RESALE PRICE METHOD:Under this method, the first step is to identify the price at which property purchased or services obtained by the enterprise from an “Associated enterprise” is resold or are provided to an unrelated enterprise. From such resale price, the amount of a normal gross profit margin accruing to the enterprise or to an unrelated enterprise from same or similar transaction is to be reduced. The price so arrived is further reduced by the expenses incurred by the


enterprise in connection with the said transaction. Then such price is to be adjusted to take into account the functional and other differences, including differences in accounting practices, which could materially affect the amount of gross profit margin in the open market, between the transactions being compared or between the enterprises entering into such transactions. Such adjusted price can be called as arm’s length price computed under this method.

COST PLUS METHOD:Under this method, the first step is to determine the direct and indirect cost of production incurred by the enterprise in respect of property transferred or services provided to an associated enterprise. The next step is to determine the normal gross profit mark-up to such costs computed according to the same accounting norms of the enterprise or unrelated enterprise in connection with the same or similar comparable uncontrolled transaction. The said normal gross profit mark-up is to be adjusted on account of functional and other differences if any, which could materially affect such profit mark-up in the open market, between the transactions being compared or between the enterprises entering into such transaction. Such profit mark-up is to be added in the cost calculated as per the first step. The sum so arrived at, can be called as arm’s length price computed under this method.

TRANSACTIONAL PROFIT METHOD PROFIT SPLIT METHOD:

Under this method, the first step is to determine the combined net profit of the “Associated enterprise” arising from the international transaction in which the enterprises are engaged. After that the relative contribution made by each of the associated enterprise the combined net profit is evaluated on the basis of the functions performed, assets employed or to be employed, reliable external data and risks assumed by each enterprise. The combined net profit is then split amongst the enterprises in proportion of their relative contributions and such apportioned profit shall be taken into account to arrive at the arm’s length price in relation to the international transaction.

TRANSACTIONAL NET MARGIN METHOD:

Under this method, first the net profit margin realized by the enterprise from an international transaction entered into with an “Associated enterprise” is computed in relation to costs incurred or sales effected or assets employed or to be employed or any other relevant base. Then the net profit margin realized


by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction is computed with regard to the same base. Such net profit margin arising in comparable uncontrolled transactions is to be adjusted on account of differences if any, which could materially affect the net profit margin in the open market, between the transactions being compared or between the enterprises entering into such transaction.

SUMMARY OF METHODSMethods Product

Comparability Functional

comparability Approach Remarks

CUP Very High Medium Prices are benchmark

ed

Very difficult to apply as very

high degree of comparability

required

RPM High Medium GPM (on

sales) benchmark

ed

Difficult to apply as high degree

of comparability required

CPLM High High GPM (on costs)

benchmarked

Difficult to apply as high degree

of comparability required

PSM Medium Very High Profit Margins

Complex Method, sparingly used

TNMM Medium Very High Net Profit Most commonly used Method

SELECTION OF MOST APPROPRIATE METHOD

THE MOST APPROPRIATE METHOD SHALL BE SELECTED HAVING REGARDTO THE FOLLOWING:

The nature and class of the international transaction;

The class or classes of associated enterprise entering into the transaction and the functions performed by them taking into account assets employed or to be employed and risks assumed by such enterprises;

The availability, coverage and reliability of data necessary for application of the method;

The degree of comparability existing between the international transaction and the uncontrolled transaction and between the enterprises entering into such transactions;

The extent to which reliable and accurate adjustments can be made to account for differences, if any, between the transactions being compared and the enterprises entering into such transactions;

The nature, extent and reliability of assumptions required to be made in application of a method; It is provided that where more than one price is determined.

COMPARABILITY FACTORSFOR COMPARING AN INTERNATIONAL TRANSACTION WITH ANUNCONTROLLED TRANSACTION, REFERENCE SHOULD BE MADE TOTHE FOLLOWING:

The specific characteristics of the property transferred or services provided in either transaction;

The functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions;

The contractual terms (whether or not such terms are formal or in writing) of the transactions which lay down, explicitly or implicitly the responsibilities, risks and benefits to be divided between the respective parties to the transactions;

Conditions prevailing in the markets in which the respective parties to the transactions operate, including the geographical

location and size of the markets, the laws and government orders in force costs of labor and capital in the markets, overall economic development and level of competition and whether the markets are wholesale or retail.

TRANSFER-PRICING AUDIT

Limit of Rs. 5 Crores has been enhanced to Rs. 15 Crores with effect from Financial Year 2005-06.

Use of data in the year the transaction takes place; however at the time of preparation of documentation the assesses had access to data only of prior years. TPOs are seeking to rerun comparable search with current data.

ASSESMENT PROCEDURE File tax return & Accountant’s Report (30th September)

i

Reference to be made to TP Officer (‘TPO’) by the Assessing Officer (‘AO’); Compulsory Reference to be made by AO if international transaction exceed Rs 50 million

i

Notice to be issued by the TPO for calling supporting documents and evidences

i

TP Audit

i

Preparation of Draft order

i

Passing of order within 1 month from the end of the month if No Objection on the draft order by the Tax payer within 30 days or time expires for filing the objections within 30 days

i

If tax payers has objection he will file objections to Dispute Resolution Panel within 30 days from thedate of draft order

i

Dispute Resolution after hearing TPO and Tax payer along with evidences will either give directions tothe TPO or no directions, within 9 months from the end to the month in which the draft order is

forwarded to the tax payer

i

Within 1 month from the end of the month in which direction is received, or expiry of 9 months whichever is earlier, the TPO will pass the final order in conformity with the directions of the Dispute

Resolution Panel

i

Based on results of the above mentioned procedure Assessing Officer will pass the order

REPORTING REQUIREMENTS

Every tax payer entering into international transaction to obtained an accountant report in prescribed form i.e. Form 3CEB.

Every accountant report to be submitted on or before the due date for filing tax return

Accountant report contain the following information

Contains summary of international transaction

Contains details of tax payer

Contains method employed to determine ALP

DOCUMENTATION

ENTITY RELATED PRICE RELATED TRANSACTION RELATED

Profile of industry

Profile of group

Profile of Indian entity

Profile of associated enterprises

Transaction terms

Functional analysis (functions, assets and risks)

Economic analysis (method selecting, comparable benchmarking)

Forecasts, budgets,

Agreements

Invoices

Pricing related correspondence (letters, emails etc.)

PENALTY

DEFAULT NATURE OF PENALTY

In case of a post inquiry adjustment, there is deemed

to be a concealment of income

100 – 300 % of tax on the adjusted amount

Failure to maintain documents 2% of the value each international transaction

Failure to furnish documents 2% of the value each international transaction

Failure to furnish accountant’s report

Rs. 100,00

KEY ISSUES/CONTROVERSY Use of secret comparables not prohibited

Selection of time period

Availability of corporate data

Limited guidance on adjustment methodology

Avoid loss making companies and negative net worth

Circular interferes with the judicial discretion of TPO

No safe harbor clause provisions

No advance pricing agreement provision

Use of current data rather than data available up-to the date of filing of Tax return

No significant legal precedents on Transfer pricing matters as yet

No use of earlier years data

RECENT EXPERIENCES/TAKE-AWAY

Adjustment allowed

Working capital Risks Growth IP Under utilization of capacity Difference in accounting policies

Loss making comparables accepted except continuous loss making companies

Independent comparable having related party transactions (more than 15%) not accepted

OECD and US Guidelines on Transfer Pricing accepted

Emphasis on FAR analysis than other economic factors

COND Next Slide……..

Segmental results to be considered

Transfer Pricing not an exact science and hence reasonable presumption and approximation accepted

Multiple year data generally not accepted

Transfer Pricing law in India at very infancy stage

Start-up company and low net worth companies not accepted

In TNMM, comparability at broader level in terms of product accepted

DOMESTIC LAW DISPUTE RESOLUTION PROCESS

Transfer Pricing

Officer

Dispute Resolution

Panel

Appellate Tribunal

High Court Supreme Court

Order passed within 1 month from end of the month in which direction from Dispute

Resolution Panel is received or end of 9 month from the end of month in which draft order is forwarded.

Direction to be issued within 9 month from the end of the month in which objection are forwarded

Final fact finding authority

No specific time limit

Generally order passed within 2 – 4 years from filing of appeal

Revenue can also go on appeal if Commissioner decides in favor of taxpayer

Final fact finding

authority

No specific time limit

Generally order passed within 2 – 4 years from filing of appeal

Revenue can also go on appeal if Commissioner decides in favor of taxpayer

INTERNATIONAL DISPUTE RESOLUTION PROCESS

(MUTUAL AGREEMENT PROCEDURE PROCESS)

Overseas Taxpayer

Overseas Competent Authority

Indian competent Authority

India Tax administration

Overseas Taxpayer can invoke CA proceedings in case there is double taxation or taxation not in accordance with the tax treaty

Technically, application is possible even before assessment is made.

If overseas CA consider the application appropriated, application forwarded to the Indian CA

CAOVERSEAS CA could request Taxpayer for additional information

Indian CA ON RECEIE OF map REQUEST FROM OVERESAS CA could consider the same for discussion

Additional information could be requested before the cases in expected

In case the matter is resolved between the CAs and accepted by the Taxpayer, the same is communicated to the Tax Officer

Overseas and India CAs would initiate negotiate negotiation and attempt to reach an amicable resolution

CAs may set up certain procedures/guidelines which they will adhere to during the negotiation process

In case the CAs reaches a resolution, the proposed agreement should be communicated to the Taxpayer for his acceptance.

Taxpayer has option not to accept the agreement in case it is detrimental taxpayer may seek correlative relief in the overseas jurisdiction

EVALUATION OF ALTERNATIVE DISPUTE RESOLUTIO OPTIONS

Criteria Map Appeal

Time frame Generally 1-2 years Can range from 2 to 20 years, depending upon level

Approach More scope for negotiation /compromise, CAs could

agree on a “ middle path”

Legalistic approach, no negotiations

Taxpayer involvement At the discretion of CA Significant involvement

Binding nature Binding on CA, Taxpayer need mot accept if detrimental can

continue with domestic tax law appeal

Binding, but sequential appeals ca be made to higher judicial authorities.

Double tax mitigation Possibility of avoiding double tax impact through correlative

relief

Double tax exposure if appeal is against taxpayer, correlative relief

to be separately pursued.

Collection of taxes MOU for suspending collection of taxed (with US)

STAY FO DEMAND AT THE DISCRETIO OF THE Tax officer and Appellate

Authorities

Finally Greater change of reaching finality, decision of CA binding on Tax officer

Tax officer can prefer appeal if first-level appeal is in Taxpayer’s favor

Experience Inadequate experience in TP, but better general appreciation of international tax issues

n/Limit TP experience at this stage

Coverage Possibility of covering even subsequent years on the

basis of anticipated adverse results

Would need t await assessment order for ach year before filing appeal.

WHAT WE DO FOR QUARK SOFTWARE

WE OFFER THE FOLLOWING:

REPRESENTATION SERVICES

Income Tax International Tax Transfer Pricing Appeal

REPRESENTATION SERVICES

Service Tax Foreign Investment Promotion Board Department of Company Affairs Exchange Control Department STPI

COND Next Slide…….

REVIEW SERVICES

AUDIT & ASSURANCE SERVICES

Management audit Special audit

CERTIFICATION

COMPLIANCE & PLANNING SERVICES

OPINIONS

CONSULTATIONS & ADVISORY SERVICES

SIGNATORY SERVICES

TAX CALENDER

SL NO. NAME OF

COMPANY TYPE AUTHORITY STATUS AS ON

16.11.2010

A QUARK SYSTEMS PVT. LTD

1A/Y 2004-05 Appeal- Department Third Appellate Authority

(High Court)

Date not fixed as we are not confirmed whether dept. will go in appeal

2A/Y 2005-06 Appeal- Department Second Appellate Authority

(ITAT) Case adjourned to 08.12.2010

3 A/Y 2006-07 Appeal – Company Dispute Resolution Panel Order Received

4 A/Y 2007-08 Scrutiny/Audit Tax Officer Case is fixed for 17.11.2010

5 A/Y 2007-08 Scrutiny/Audit Transfer Pricing Officer Order received



B QUARK MEDIA HOUSE INDIA PVT. LTD

1A/Y 2005-06 Appeal- Department Second Appellate Authority

(ITAT) Case is fixed for 08.12.2010

2 A/Y 2006-07 Appeal- DepartmentSecond Appellate Authority (ITAT)

Hearing is under progress


4 A/Y 2007-08 Scrutiny/Audit Transfer Pricing Officer Order received


6 A/Y 2008-09 Scrutiny/Audit Transfer Pricing OfficerDocuments & Submission

submitted

7 A/Y 2009-10 Scrutiny/AuditTax Officer Case is fixed for 22.11.2010

C QUARK COMMERCE INDIA PVT. LTD

1A/Y 2005-06 Appeal- Department

Second Appellate Authorities(ITAT) Case is fixed for 08.12.2010

2 A/Y 2006-07 Scrutiny/AuditFirst Appellate Authority (CIT-A)

Hearing is under progress

3 A/Y 2008-09 Scrutiny/Audit Tax Officer Date not fixed

4 A/Y 2008-09 Scrutiny/Audit Transfer Pricing OfficerDocuments & arguments

submitted

5 A/Y 2009-10 Scrutiny/Audit Tax Officer Company merged

d QUARK INDIA PVT. LTD

1A/Y 2004-05 Appeal- Department

Second Appellate Authorities(ITAT) Hearing under progress

2 A/Y 2008-09 Scrutiny/Audit Tax officer Case is fixed for 25.11.2010

THANK YOU

www.ramanaggarwal.com

Registered office: SCO 35, Second Floor, Sector -26, Chandigarh 160 019

Tel- 91-172-2790366, 2790075, Fax-91-172-2790260, Mobile-09814011278Email: [email protected]