TMI Blog2011 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... bligation to file return of income. It may be mentioned that where it is not necessary for a non- resident to furnish return under section 139(1) of the Act, the statue has specifically provided, as is the case under section 115AC(4) of the Act. Apart, it is necessary to have all the facts connected with the question on which the ruling is sought or is proposed to be sought in a vide amplitude by way of a return of income than alone by way of an application seeking advance ruling in Form 34C under IT Rules 1962. Instead of causing inconvenience to the applicant, the process of filing of return would facilitate the applicant in all future interactions with the Income-tax department. - AAR NO. 871 OF 2010 - - - Dated:- 28-3-2011 - P.K. BALASUBRAMANYAN, CHAIRMAN, J. KHOSLA AND V.K. SHRIDHAR, MEMBER S RULING Mr. V.K. Shridhar The applicant, VNU International B.V., is a company incorporated in the Netherlands. The applicant states that it is a tax resident of the Netherlands and does not have any permanent establishment in India. It is a subsidiary of the Nielsen Company B.V. The applicant holds 100 per cent shares of AC Nielsen ONG-MARG Pvt Ltd. (ACNOM), a company inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transfer pricing provisions of section 92 to 92F of the Act? 4. On the facts and circumstances of the case, whether IMS-AG would be liable to withhold taxes under section 195 of the Act and if so, on what amount would the tax have to be deducted? As the applicant had already transferred shares of ORG-IMS to the purchasers, a request was made through letter dt. 25.03.2010 seeking to amend questions at Sr. Nos 3 and 4 as under : "3. Based on the facts and circumstances of the case, whether the transfer of shares by the applicant to the purchasers would attract transfer pricing provisions under sections 92 to 92F of the Act? 4. On the facts and circumstances of the case, whether the purchasers were liable to withhold tax at source under section 195 of the Act and if so, on what amount should the tax have been deducted?" 4. The applicant submits that income which is received/deemed to be received in India or which accrues or arise/deemed to accrue or arise in India to a non-resident is liable to tax in India in view of section 5(2) of the Income-tax Act 1961 (Act). Section 9(1) of the Act is a deeming provision which treats certain categories of income as accruing in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow: "Article 13 - CAPITAL GAINS" 1. Gains derived by a resident of one of the States from the alienation of immovable property referred to in Article 6 and situated in the other State may be taxed in that other State. 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of one of the States has in the other State or movable property pertaining to a fixed base available to a resident of one of the States in the other state for the purpose of performing independent personal services, including such gains from the alienation of such permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State. 3. Gain from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the State in which the place of effective management of the enterprise is situated. For the purposes of this paragraph, the provisions of paragraph 3 of Article 8A shall apply. 4. Gains derived by a resident of one of the State from the alienation of shares (oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from sale of shares of ORG-IMS. The learned Advocate further contended that the capital gains earned by the applicant on transfer of shares would be covered by Article 13(5) of the Tax Treaty and shall be taxable only in the state in which the transferor is a resident. As the applicant is a resident of the Netherlands, any capital gain earned by it would be taxable in the Netherlands. Further condition under Article 13(5) that gains from alienation of shares issued by an Indian company forming part of at least 10% interest in the capital stock of that Indian company can be taxed in India, if the transfer takes place to a resident of India is not attracted as the shares of ORG-IMS have been transferred to the purchasers who are residents of Switzerland. 7. Conceding the applicant's contentions to question Nos.1, 3 and 4, the revenue submits that as per the facts provided by the applicant, it is apparent that Article 13(5) would be applicable as the purchaser companies are not the residents of India. The taxability of the capital gains would arise only in the Netherlands and the transaction would not be liable to tax in India. The transfer pricing provisions from sections 92 to 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions on the basis of a single transaction. The argument that it would be burdensome to comply with the formalities of filing the return is not a valid excuse. 11. We think that submissions made by the learned CIT are sound and need to be accepted. It appears to us that this Authority formed the view in the rulings cited supra on the basis that the expression "income" appearing in section 139 is not used in a sense wider than or different from its scope and connotation else-where in the Act. A ruling under the Act is confined to the facts projected in the application leading to the ruling and binding only on that party and the Revenue. In a case where, there is a liability to tax under the Income-tax Act and that liability is removed only by virtue of the provision in the Treaty, we think it proper to re-examine the question. 12. Let us refer to section 139(1) which deals with the filing of return of income. The relevant portion of section 139(1) of the Act is extracted below : "Return of income. 139. (1) Every person ... (a) being a company for a firm]: or (b) being a person other than a company [or a firm], if his total income or the total income of any other pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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