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2018 (2) TMI 855 - AAR - Income TaxTaxability of capital gains in India - transfer of shares held in ‘AB’ International Private Limited (‘AB’ International) to a group company, ‘AB’ Singapore Pte - eligibility of benefits of India-Mauritius tax treaty - Held that:- Yes, the Applicant would be entitled to the benefits of the Agreement between the Government of Mauritius and the Government of the Republic of India for the avoidance of double taxation and prevention of fiscal evasion; and the income and capital gains arising to the Applicant from the proposed sale of shares in ‘AB’ International to a group company in Singapore would not be liable to tax in India in terms of Article 13 of the said Treaty. Applicability of section 195 - whether tax has to be withheld on the gains arising from the sale of shares? - Held that:- As held in GE Technology Centre P. Ltd. v. CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] that in cases where there is no chargeability to tax under the provisions of the Act, as per expressions used in the section itself (unlike section 92), there will be no obligation to withhold tax. Respectfully following that decision, we are of the view that there is no obligation on the Applicant to withhold tax in this case, as we have held that the capital gains arising in the hands of the Applicant was not chargeable to tax in view of paragraph 4 of Article 13 of the India – Mauritius DTAC. Applicability of transfer pricing provisions - Held that:- As against the position in section 195 of the Act, there is no such requirement in section 92 that the transaction should result in income chargeable to tax under the Act for TP provisions to get attracted. Hence, the transaction in the instant case of sale of shares in ‘AB’ International will have to be benchmarked as per the transfer pricing provisions contained in Chapter X of the Act. Thus transfer pricing provisions contained in sections 92 to 92F of the Act would apply to the proposed transaction. Applicability of section 115JB on the subject transaction - Held that:- The Applicant as well Revenue agree that the provisions of the said section shall not be applicable to foreign companies, as per the retrospective amendment to section 115JB by Finance Act, 2016, and the clarification issued by the CBDT dated 24 September 2015.This being so, we have no reason to disagree. The provisions of section 115JB shall not be applicable.
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