CC asked to provide billing info as India tax dispute reaches Supreme Court
Clifford Chance’s (CC’s) India tax dispute has reached the country’s Supreme Court, with the firm asked to provide details of fees it received for advising on projects during the late 1990s.
The long-running dispute has been closely watched by lawyers hoping for greater clarity on how legal fees for India-related work are taxed.
In December last year the Bombay High Court ruled in favour of an appeal made by CC, with the court subsequently ruling that a foreign law firm may only be taxed in India on work performed in the country.
CC had previously been ordered by India’s Commissioner of Income Tax to pay taxes amounting to around $3m (£2m) on all of the fees the firm earned on work performed on four energy infrastructure projects undertaken in India during 1996-98.
The magic circle firm primarily advised non-Indian participants on UK law aspects of the projects, and much of the work was handled outside of India. CC challenged the assessment, arguing that only around $871,000 (£592,000) in fees actually billed in India should be taxable.
The Bombay High Court took up the case after India’s Income Tax Appellate Tribunal ruled in September 2001 that the nature of the work should determine its taxability in India.
CC said in a statement: “We do not comment on the details of our tax affairs. We take tax compliance very seriously and of course comply with orders made by the Indian courts. We are in the process of complying with this particular order which is a request for information in relation to a claim by the Indian income tax department.”
“The claim raises essentially the same issues as were raised in a case recently decided in our favour by the Bombay High Court. The Indian tax authorities are now appealing that decision but we have every expectation of prevailing.”
Source: legalweek.com 11 November, 2009
