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2012 (8) TMI 434 - AAR - Income TaxGift by foreign company incorporated in Singapore of shares held in Indian company to its Indian subsidiary without consideration - transfer effected before the coming into force of section 56(2)(viia) – applicant contending non-taxability u/s 45 r.w.s. 48 since the transfer was one without consideration whereas Revenue questioning genuineness of the transaction and contending the same to be with purpose of avoiding tax – Held that:- The shares dealt with are shares of a public limited company governed by the Companies Act, 1956. It is claimed that, what can be called an oral gift, was made by one corporation to another corporation. Such a form of transfer appears to be strange, unless it be one which has been set up for some purpose. It is necessary for the applicant to demonstrate before this authority that the transfer was authorized by the Articles of Association and was effected in the mode prescribed by the Articles of Association and meeting the requirements of section 82 of the Companies Act. Hence, proper enquiry by AO into the question of the genuineness and validity of the transaction is necessary. Hence forth, ruling declined Further, Section 47(i) and (iii), applies to gift by individual or a HUF or a Human Agency. A gift by a corporation to another corporation (though a subsidiary or an associate enterprise, which is always claimed to be independent for tax purposes) is a strange transaction. To postulate that a corporation can give away its assets free to another even orally can only be aiding dubious attempts at avoidance of tax payable under the Act.
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