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2012 (3) TMI 264 - AAR - Income TaxCapital gains – transfer – buy back of shares under Section 77A of Companies Act, 1956 – applicant being German company held 99.99986% in its subsidiary Indian company – 0.00002% i.e. one share each held by its 6 nominees to comply with requirement of having minimum 7 members – applicant contended that transfer of shares vide buy back of shares by indian company is exempted transfer u/s 47(iv) since it together with its nominee held 100% shares of company – applicability of Section 115JB – TDS – Held that:- Applicant's argument that the holding of the shares by the nominees should be treated as the holding of the shares by the applicant and the applicant must be treated to be holding 100% shares cannot be accepted in the face of the requirement u/s 49(3) of the Companies Act and the illegality that would spring from its acceptance. Therefore, word 'or' will not be read as 'and' in Section 47(iv). Further Section 47 overrides Section 45 but does not override Sec 46A. Therefore, proposed buyback of shares would not be exempt in view of Section 47(iv) and income is chargeable to tax in terms of Section 46A r.w.s. 48. Also, applicant is not entitled to receive the amount on buy-back of shares without any deduction of tax at source and Section 115JB has no application in this case.
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