9911796707
TMI Blog2012 (8) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... SA. The applicant was incorporated in Mauritius in the year 1999. It is a tax resident of Mauritius. 2. Armstrong World Industries India (Pvt.) Limited (Armstrong India) was incorporated in India in the year 1999 as a fully owned subsidiary of Inarco Ltd., an Indian company. Inarco Limited was engaged in the business of production of textile machine parts and floorings. Armstrong UK, through the applicant, was holding 50% of the share capital in Inarco Limited. Pursuant to a scheme of amalgamation, approved by the High Court of Bombay, the flooring business of Inarco Limited was transferred to Armstrong-India. In consideration of that transfer of business, Inarco Limited was allotted 3,60,000 shares of the value of Rs.10/- each in Armstron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Advance Rulings originally on two questions (the intention was to seek rulings on three questions) and subsequently adding another question, but still omitting to raise one of the questions originally intended to be raised. 5. After hearing both sides the application was allowed under section 245R(2) of the Act, by this Authority to render Rulings on the following questions: 1. Whether on the facts and in the circumstances of the case, Armstrong World Industries Mauritius ('Armstrong Mauritius') or 'the applicant') would be liable to tax in India on the capital gains that may arise, from buyback of shares by its Indian subsidiary, viz. Armstrong World Industries India Private Limited ('Armstrong India) as per the provisions of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Tax Residency Certificate. The whole scheme was one designed for non-payment of capital gains tax in India. 7. At the hearing, learned counsel for the applicant submitted that the series of transactions were commercially dictated and the original scheme had even been approved by the High Court of Bombay. The shares had been held bona fide as investment. The buyback of shares proposed was based on sound commercial considerations and was a bona fide transaction. Even if the original capital might have flowed from USA or UK, the coming into existence of the applicant as an investor in the year 1999 cannot be ignored. Alternatively, it was submitted that the buyback was not a transfer for the purpose of section 45 of the Act since it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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. Since paragraphs 1 to 3 of Article 13 are not attracted, paragraph 4 of Article 13 has application. Then, the capital gains could be taxed in Mauritius alone. The argument that it is not actually taxed in Mauritius and hence the DTAC cannot have application, cannot also be accepted in the face of the decision in UOI v. Azadi Bachao Andolan, what ever may be its merit. 11. Hence on question no. 1 formulated for Ruling, it has to be ruled that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxing statute one has to look merely at what is clearly said. There is no room for any intendment." Nothing is to be read in, nothing is to be omitted. 13. Following the ratio of the Ruling in In Re RST (AAR 1067 of 2011), I rule on question no. 2 that the proposed transaction is not exempt by virtue of section 47 (iv) of the Act. 14. Question no. 3 is whether sections 92 to 92F of the Act apply to the transaction in question. I have ruled in AAR No. 999 of 2010 that sections 92 to 92F will be attracted. I adopt the reasoning therein. Admittedly, the present is an international transaction between related parties. Income arises out of it. Hence, sections 92 to 92F of the Act are attracted. So, on question no. 3, I rule that sections 92 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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