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2018 (2) TMI 1428 - AAR - Income TaxCapital gains arising to the Applicant- Transferor, a tax resident of Mauritius, from sale of shares - Benefit of DTAA - whether the Transferee shall not have any liability to deduct tax at source under section 195? - department contended that the working of capital gain involves correctly working out the total sales consideration which in turn depends upon the value assigned to each share of SIPL and Scorpio and this involves the determination of fair market value of the said property Held that:- We do not feel that questions raised involve any valuation and determination of fair market value of property. The computation of capital gains is embedded in the concept of valuation and merely for this reason the question of capital gains arising in Application cannot be held to be barred by clause (ii) of the proviso to section 245 R(2). Especially so when it is stressed that the questions pertain to the legal admissibility of the transaction and not of any valuation the aspect of profit shifting raised by the Revenue is also unclear in regard to the law from which the inference is drawn - it is merely an assumption on the part of the Department and cannot be considered as a bar. The Departmental Officer sought some more time to make submission in regard to clause (iii) of the proviso to section 245 R(2) and that being declined by this Authority, he requested that the issue may be kept open for consideration during the proceedings under section 245 R(4). Thus the Application is admitted under section 245 R(2) for giving rulings on the two questions mentioned earlier, keeping open the issue of avoidance of tax which the Department may raise, if so desired, during section 245 R(4) proceedings.
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