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TMI Blog2012 (8) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout consideration. The transaction which was a gift, was also exempted from the operation of section 45 of the Act, by virtue of section 47(iii) of the Act. The applicant was approaching this Authority for a Ruling on the relevant questions raised in the application. 2. This Authority allowed the application under section 245R(2) of the Act for giving rulings on the following questions: (1) On the facts and in the circumstances of the case, whether the transfer of Bharath Wind Farm Limited ('BWFL India') shares by Orient Green Power Pte Ltd ('OGPP Singapore') to Orient Green Power Company Limited ('OGPL India') without consideration, in order to consolidate its Indian operations, would be subject to tax under the Act in India in the hands of OGPP Singapore? (2) Without prejudice to the above, whether the transfer of BWFL India shares by OGPP Singapore to OGPL India without consideration would be covered under section 47(iii) of the Act and therefore not chargeable to tax in the hands of OGPP Singapore? (3) On the facts and in the circumstances of the case, whether the transfer pricing provisions contained in section 92 to 92F of the Act would be applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After describing the earlier circumstances leading to the acquisition of shares by the applicant, it is pleaded that the applicant has hardly any income and it has been used as a conduit to transfer money in form of share capital, from one Group Company in India to another Group Company in India through Singapore. It is submitted that by an intricate and complex transfer of shares, the applicant, a virtual shell company with hardly any independent earnings, was holding 99.61% shares of OGPL India (pre-issue) the market value of which was about Rs.11063.28 millions. The present transaction should not be viewed in isolation and should be seen as part of the complex web of transactions as set out in the statement. The transaction was not a gift. The transaction is couched in this form only to eliminate tax implications. The transaction is not a gift and in any event, it is null and void. It has also been deliberately pre-dated to get out of the clutches of the amendment to the Income-tax Act affecting such transactions. 5. In its reply to the comments of the Revenue, the applicant has reiterated its position that it was a gift of the shares held by it, that the transaction was a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant is that on the strength of a board resolution, the representative of the applicant handed over the share certificates and the share transfer forms to the representative of OGPL India declaring that he was making the gift of the shares on behalf of the applicant. It may be noted that the shares allegedly gifted are the shares in an India company. Under section 82 of the Companies Act, the shares in any company shall be moveable property transferable in the manner provided by the articles of the company. The applicant has not pleaded either in the original application or in the subsequent written submissions, that the transfer of the shares allegedly gifted, was in the manner provided by the Articles of the company. In other words, it is not pleaded by the applicant that the Articles of the company authorized the transfer of shares without consideration by physically handing over the share certificates along with the transfer forms to another company. Section 108 of the Companies Act mandates that the transfer shall not be registered except on production of the instrument of transfer. What is the manner of transfer provided by the Articles of Association is not made clear. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the transaction, in addition to its validity. When such transactions are entered into involving assets, substantially worth, it behoves the applicant before this Authority, to establish to the hilt, the factum, the genuineness and the validity of the transaction, of the right to enter into the transaction and the bona fides of the transaction especially when the Revenue has challenged the genuineness of the transaction itself. In the light of the pleas raised by the Revenue and the circumstances obtaining, I feel that a proper enquiry into the question of the genuineness and validity of the transaction is necessary. I find that the Assessing Authority under the Act would be in a better position to go into and decide these questions. On the materials now before me, I do not think that I should venture into entering a finding one way or the other on the genuineness and validity of the transaction. If I undertake such an exercise on the materials now before me, I would not be doing justice to either of the parties or to the cause. Hence, I Ieave open the question for decision to the Assessing Officer. In view of the failure of the applicant to show that the alleged transfer in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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