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2016 (2) TMI 495 - AT - Income TaxCapital gain arising on transfer of shares taxable in India - whether the exception given in Article 13(5) of the India Netherland DTAA is not applicable to the said transaction - Held that:- Two different activities have been combined with the scheme of arrangement. The first one was to buy back shares belonging to non-resident share holders and the second one was to cancel the shares so purchased. We agree with the view taken by Ld CIT(A) that they are two different actions and both should not be clubbed together, even though M/s Century Enka Ltd has combined the same, for the sake of its convenience, in the scheme of arrangement. The assessee herein, in our view, should in no way concerned by the action of cancellation of share resulting in reduction of share capital. Accordingly, we are of the view that the attempt of the assessee to bring the transferring of shares within the ambit of the term “reorganisation” may not be correct, since the object of the arrangement was not financial restructuring, but to provide an exit route to the non-resident shareholders. In view of the above, we are of the view that the Ld CIT(A) was justified in upholding the view taken by the AO on this issue. Accordingly we uphold his order on this issue. - Decided against assessee Entitlement to concessional rate of tax provided in the second proviso to sec. 112 - Held that:- The only contested in the appeal filed by the revenue relates to the rate at which the capital gains is taxable. The Ld A.R submitted that this issue is covered in favour of the assessee by the decision rendered by Hon‟ble Delhi High Court in the case of Cairn U.K. Holdings Ltd (2013 (10) TMI 430 - DELHI HIGH COURT ), which was followed by the co-ordinate bench of Tribunal in the case of ADIT Vs. Abbott Capital India Ltd ( 2014 (5) TMI 316 - ITAT MUMBAI ). Hence, we are of the view that the Ld CIT(A) was justified in holding that the assessee is entitled to concessional rate of tax @ 10% on the impugned Capital gains.- Decided against revenue
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