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2012 (8) TMI 622 - AAR - Income TaxIndia Mauritius DTAC - buy back of shares from Indian subsidiary/applicant by AWIL United Kingdom - taxability - Held that:- No adequate material has been disclosed to justify a finding that the applicant or its principal has resorted to the devising of a scheme for avoidance of tax. It may be true that the applicant was incorporated in Mauritius and the investment made through it for acquiring shares of the Indian company to take advantage of the Indian Mauritius DTAC but that by itself is no ground to discard the claim of the applicant for benefit under the India Mauritius DTAC - . Once it is held that the applicant is entitled to invoke the India Mauritius DTAC, then it is clear that Article 13 of the said DTAC is attracted - the capital gains arising out of the proposed buyback of shares is not taxable in India in view of paragraph 4 of Article 13 of the DTAC between India and Mauritius. Applicability of Section 47 - Held that:- Section 47 (iv) has to be read as conferring benefit in three situations, one, when the parent company holds the whole of the share capital of the subsidiary, two, when the nominees of the principal hold the whole of the share capital of the subsidiary and three, when the principal and the nominee together hold the whole of the share capital of the subsidiary - There appears to be no justification in reading “or” as “and” to hold that when a principal and its nominee hold the whole of the share capital, that case will also come within the ambit of the provision thus the proposed transaction is not exempt by virtue of section 47 (iv) Whether sections 92 to 92F will apply to the transaction ? - Held that:- As the present is an international transaction between related parties, and income arises out of it. Hence, sections 92 to 92F of the Act are attracted.
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