mnarch (ca, llb) (47 Points)
10 September 2011Dear All,
Can an private company in India having 20% stake in LLC in USA claim set - off for Losses incurred in LLC in USA while computing and paying their Tax in India.
If the private company in India can claim Losses in India then what is the relevant section.
Kindly provide any case law if applicable.
Thanks and Regards,
Monarch Gandhi
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7014 Points)
Replied 26 September 2011
No ,the set off of Losses can be either from a Branch of Indian Company or on a merger of Indian Company with US LLC.
Anuj
+91-9810106211
femaquery @ gmail.com
vinita
(CA Practice )
(35 Points)
Replied 05 October 2011
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7014 Points)
Replied 06 October 2011
Dear Vinita,
US LLC is a seprate entity and the indian investment there is just a shareholding of indian company.
Practically ,I wonder why the Indian company will like to go to pass through option as it can expose it to Indian Taxation.
But theoritically if it does then I need to check what shall be its implications.
Anuj
+91-9810106211
femaquery @ gmail.com
vinita
(CA Practice )
(35 Points)
Replied 07 October 2011
Dear Anuj,
Actually they want to go for LLC because C-corp involves double taxation within USA. Since tax is payable in USA on the profits as well at the time of distribution of income. But LLC offers a pass through option wherein there is no double tax in US. But upon review of US-India DTAA, in my view LLC would also involve double tax albeit in both countries, since the profits in US would be taxed in US as well as In India in hands of Indian Company, in case they go for pass through option. Also, I have read some where that US -India treaty does not allow credit for US taxes paid except to the extent of tax paid on dividend. But would like to reconfirm this with an expert.
Would appreciate if u can pls comment on my view based on your experience in this regard.
Many thanks!
CAclubindia
