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2018 | OriginalPaper | Buchkapitel

Making International Tax Law: Analysing Tax Jurisprudence in India

verfasst von : Ajay Kumar

Erschienen in: Locating India in the Contemporary International Legal Order

Verlag: Springer India

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Abstract

An analysis of the tax jurisprudence in India gives a feeling that the developing countries are fully aware of the revenue implications of the international tax rules. This thought is particularly important since the theoretical basis of international taxation (principles) remains unsettled. It would seem that the courts in India have been careful in working these principles—to balance the revenue interests with the inflow of FDI. On a closer analysis of some of these cases, it becomes evident that the national courts may be less cognisant about the principles and the role the courts are expected to play within the international tax regime.

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Vorheriges Kapitel India and Bilateral Investment Treaties: From Rejection to Embracement to Hesitance?

Nächstes Kapitel Protection of Traditional Knowledge and Expressions of Folklore: Locating India in the Global Framework

Raz explained coherence as the justifications provided to the existing legal materials (statutes, decisions, and rules) by principles, policies and purposes; Raz (1992), p. 285.

Refers to the range of laws, rules and principles.

Bourdieu (1987), p. 848.

Ault (1992), p. 571.

For a discussion on the narrow or broader definition of International Economic Law; Qureshi and Ziegler (2011) pp. 8–13.

For example, Japan has made reservations to Art. 4 of the OECD model by stating that it reserves the right to decide the meaning of residency through negotiations while concluding the treaty; Refer, Commentary to Art. 4, OECD MTC 1977, Paragraph, 27. Also refer, Teruo Hirao, Elucidation of The Tax Convention – OECD Draft Convention, 1964, p. 27; cited in, Jones et al. (1981), p. 17. Also refer, Commentary to Art. 5 UN Model Double Tax Convention, 2011, Paragraph 10.2

Jones (1999), p. 2.

Baistrocchi (2006), p. 944 (the OECD MTC is just representative, the arguments apply to the UN MTC as well).

Kaplow (1992), p. 557.

Brunschot (2005), p. 6.

This refers to the international tax regime, including the processes through which tax laws are created and the laws/principles used to divide taxes.

Lovett (2009), p. 819.

Crawford (2012), pp. 456–459.

This refers to the benefits a national derives from the state where the person is a national; this could be in the form of legal protection in the international forums, or the sunk capital by the state in creating a conducive legal and economic framework to create capital within its territory.

Nottebohm (Liech. v. Guat.), 1955 I.C.J. 4 (Apr. 6).

Schachter (1991), p. 254.

Crawford (2012) Op. Cit., pp. 461–463.

Government of India V Taylor [1955] A.C. 491

For a discussion of this concept from the perspective of sovereignty, and idea that jurisdiction is deducible a priori from sovereignty; Martha (1989), p. 18.

For a general understanding about this treatment; Avi-Yonah (2008), pp. 471–473.

For a legal discussion on the issues of reasonable link, the question of territoriality and the limiting of jurisdiction through DTAAs’; Qureshi (1987), p. 17, 19.

Schindel and Atchabahian (2005), p. 30.

40% of all tax disputes relate to the concept of residence; for a discussion on the practice of this concept; Refer, http://www.rashminsanghvi.com/downloads/taxation/international-taxation/Concept_of_Residence.html (Accessed, 24^th May 2015).

Art. 4(3), OECD Model Convention on Income and on Capital, 2008, p. 24.

Schindel and Atchabahian (2005), p. 31.

Due to the fact that a final product is made after sourcing its components/ingredients from different places has made this concept less effective now; Schon (2009), pp. 67–68.

Vogel (1988), p. 225.

Schindel and Atchabahian (2005), pp. 29–30.

Avi-Yonah (1996), p. 1306.

Schindel and Atchabahian (2005), p. 29.

Vogel (1988), p. 223.

Schindel and Atchabahian (2005), p. 29.

Basically, the principles of source and residence are rules of distribution and has consequences because it allocates the income to one state and prohibits the other. In that sense they are opposites, but in reality that would not be the case; Vogel (2005), p. 421.

Ibid., p. 422.

Gesetzwegen Beseitigung der Doppelbesteuerung. Vom 13 Mai 1870. Cited in, Vogel, (Part -I), p. 226.

Art. 5, OECD Model Convention on Income and on Capital, 2008

It includes – the place of management, a branch, an office, a factory, a workshop and a mine, an oil–gas well, a quarry or any other place of extraction of natural resources.

This applies to both - the UN and OECD Models.

Sasseville and Skaar (2009), p. 32.

Commentary on Art. 5, UN Model Double Taxation Convention, 2011, Paragraph 5.3.

Art. 5(3)(a) UN Model Double Taxation Convention, 2011; Also refer, Commentary Art. 5, Paragraph 11

Art. 5(3)(b) OECD Model Convention on Income and on Capital, 2008

Avi-Yonah (1996), pp. 1307–1308.

Schindel and Atchabahian (2005) p. 52.

Avi-Yonah (2000), p. 1674.

Kemmeren (2001), p. 434.

Here negotiation is used to refer to an agreement reached through a participatory process and thereby leading to cooperation from a game theoretical perspective.

Hart (1958), p. 607.

Koskenniemi (1989), p. 22.

Although the word developed and developing is subject to various interpretations, developed is used here only to refer to those countries which have, historically, been the main capital exporters.

Report on Double Taxation Submitted to the Financial Committee by Prof. Bruins, Einaudi, Seligman and Sir Josiah Stamp, League of Nations Doc. E.F.S. 73.F.19 18, (1923), p. 20.

Ibid, pp. 22–23; the place of - a) acquisition of wealth (where wealth originates); b) location of wealth (situs of wealth); c) enforceability of rights to wealth (place providing legal apparatus to rights regarding wealth) and d) consumption of wealth (place or residence/domicile of the investor).

Ibid., p. 25.

Ibid., p. 27.

Kaufman (1997), p. 198.

League Report, op. cit., pp. 48–51.

Ibid., p. 42, 48.

Musgrave and Musgrave (1972), pp. 68–69.

Brooks (2009), pp. 473–475.

Ministry of Finance –India, Report of the High Powered Committee on E-Commerce and Taxation, (2001), pp. 20–21 (The Committee was of the view that the PE concept should be abandoned and a serious attempt should be made within the OECD or the UN to find an alternative to find an alternative to the concept of PE.

Ibid., p. 476.

Vogel (2005), p. 420.

Goradia and Kapila (2009), p. 346.

Entries 10 and 14 of List 1 of the Seventh Schedule of Constitution of India whereby treaty provisions get precedence.

Report by Ministry of Finance mentioned earlier ….

Ministry of Finance (India), Report of the High Powered Committee on E-Commerce and Taxation, 11–12, 2001.

Central Board of Direct Taxes Circular No. 1/2004, 2^nd Jan 2004. Also refer, Central Board of Direct Taxes Circular No. 5/2004, F.No. 500/67/2003-FTD, 28^th Sept 2004, p. 8.

[1983] 144 ITR 146.

[2011] 12 ITR (Trib) 709 (Delhi).

[1965] 56 ITR 20.

[2004] 268 ITR 9 AAR.

[2010] 42 SOT 165.

[2007] 292 ITR 416.

[2008]113 TTJ (Delhi) 446.

[2007] 109 ITD 226.

[2013] 34 taxmann.com 24 (Delhi).

[2007] 105 ITD 679.

[2014] TS-355/TII-71 (Delhi ITAT).

Wellinix Inc v ADIT [2013] 35 taxmann.com 420.

[2013] 33 taxmann.com 249 (Mumbai).

When the business of an enterprise is carried on mainly by the entrepreneur or persons who are in paid-employment with the enterprise; including personnel receiving instructions from the enterprise. The powers of such personnel in its relationship with third parties is irrelevant; Refer, Commentary Art. 5, OECD Model Convention on Income and on Capital, 2008, paragraph 10.

[2007] 292 ITR 416 (SC).

346 ITR 336 (Delhi).

[2016] (11) TMI 368 (ITAT Bangalore).

364 ITR 256 (Delhi).

Rosenbloom (1994), p. 83.

Rosenbloom and Langbein (1981), pp. 359, 397–8.

Refer, the OECD Report on Conduit Companies (paragraph 7(a)) and the UN Report on the Prevention of Abuse of Tax Treaties. Conduit Companies Report, paragraph 7(a) in ‘International Tax Avoidance and Evasion.

Avi-Yonah and HJI Panayi (2010), p. 3.

[2003] 56 ITR 563 The issue at the heart of the case was Circular No.682 dated 30.3.1994, issued by the CBDT in exercise of its powers under Section 90 of the Act, the Government of India – whereby ‘capital gains of any resident of Mauritius by alienation of shares of an Indian company shall be taxable only in Mauritius according to Mauritius taxation laws and will not be liable to tax in India’. But with some of the FIIs’ resident in Mauritius being taxed a further Circular No. 789 F. No. 500/60/2000-FTD GOVERNMENT OF INDIA, CBDT on the 13th of April, 2000 clarifying that wherever a Certificate of Residence is issued by the Mauritian Authorities, such Certificate will constitute sufficient evidence for accepting the status of residence and applying the DTAC accordingly. This circular was questioned by Azadi Bacaho Andolan to initiate a process whereby the terms of the Indo-Mauritius Double Taxation Avoidance Agreement are revised, modified, or terminated and/or effective steps taken by the High Contracting Parties so that the NRIs and FIIs and such other interlopers do not maraud the resources of the State.

Avi-Yonah and Panayi (2010), p. 9.

Ibid., pp. 115–137.

Ibid., p. 135.

Baistrocchi (2008), p. 363.

[2012] 6 SCC 613.

Kumar (2016), p. 526, 540.

[1936] A. C. 1, 24.

100

[1984] 1 All E.R. 530.

101

[1982] A. C. 300.

102

Vodafone Case, Op. Cit., para 71.

103

Ibid, para 69–71.

104

This has been the case of International Tax Law and especially the actions of the OECD; hence there is an additional responsibility on a rising economy like India which is fighting its own battle in collecting revenues, it also has to act responsibly to other developing countries; Bourdieu (1987), p. 848.

105

Baker et al. (2006), p. 28.

106

Linklaters LLP [2010] 40 SOT 51 (Mumbai) and ADIT v Clifford Chance [2013] 33 taxmann.com 200 (Mumbai).

107

Green (1998), p. 82.

108

McIntyre (2006), p. 626.

109

Sanctions or the threat of a drop in FDI was conveyed to the Indian government as they were planning to amend the Income Tax Act in India in 2012 in the wake of the Vodafone case. This threat came not only from the capital-exporting States, but also from Chambers of Commerce and business councils. Available at, http://www.ft.com/cms/s/0/58f631d0-7c22-11e1-9100-00144feab49a.html#axzz2zdtsymYJ (accessed 12/1/14).

110

In short this means coherence with efficiency is more a support for the position of a capital exporter.

111

Is used by the author to highlight the fact that it is not the single most important principle, and empirical support for it is far from robust; thus handed-down by the economists and other international bodies that support capital export.

112

Mitchell (1999), p. 189.

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Titel: Making International Tax Law: Analysing Tax Jurisprudence in India
verfasst von: Ajay Kumar
Verlag: Springer India
Buch: Locating India in the Contemporary International Legal Order
Print ISBN: 978-81-322-3578-1

Electronic ISBN: 978-81-322-3580-4

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-81-322-3580-4_7

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