TMI Blog2012 (8) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... S ) - no capital gain chargeable to tax under the Act in terms of section 45 read with section 48 can be said to arise. As condition no. (iii), to satisfy that definition what has taken place is amalgamation as defined in section 2(1B), is not satisfied as the shareholders of the applicant merging with ‘company C’ do not or cannot become shareholders of company ‘C’ as company ‘C’ is the only shareholder of the applicant,relaxation of section 47 (via) will be granted but that may be in respect of the shareholders proportion, reduced from 75% to 25%, but the condition itself is not dispensed with. Therefore, in this case, it cannot be postulated that section 47(via) takes the transaction out of the clutches of section 45 - The merger invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the merger in view of Article 8 of the Swiss Merger Act. 3. The applicant approached the Authority with this application under section 245Q of the Income-tax Act seeking advance rulings on the questions raised by it in the context of the above merger. After hearing both sides, while reserving the question for consideration whether any scheme for avoidance of tax was involved, this Authority allowed the application under section 245R(2) of the Act to render Rulings on the following questions: 1. Whether any capital gains under section 45 of the Act arises to the applicant as a result of vesting of shares of Credit Suisse Services (India) Private Limited (I Co.) held by the applicant in Credit Suisse AG on its amalgamation with Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction was exempted from the operation of section 45 of the Act by section 47 (via) of the Act and that no taxable capital gain arose in India chargeable to tax in India. On behalf of the Revenue, it is contended that the transaction is a transfer in terms of section 2(47) of the Act, that the Indian company is prosperous and it continues to exist in spite of the so-called merger, that there is consideration in law for the transfer easily capable of being quantified and that the transaction is taxable in India under the Act. Section 47 (via) of the Act is not applicable to the present case. 5. It is argued by learned Senior Counsel on behalf of the applicant that the merger of the applicant and company C had taken place as per Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions therein being satisfied. 7. Merger according to the Dictionary is amalgamation, combination, union, fusion, coalition, application, unification, incorporation, consolidation, link-up, alliance . The first argument on behalf of the applicant is that a merger does not involve a transfer. For the purposes of the Income-tax Act, transfer in relation to a capital asset is defined in section 2(47) of the Act. It is an inclusive definition. Not a restrictive definition. It includes the sale, exchange or relinquishment of an asset or the extinguishment of any right therein. 8. We notice that in the Ruling in P.3 of 1994, In re (240 ITR 518) this Authority assumed that the change of ownership of the shares from the applicant to the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain for company C . Even if there is a loss to the parent company as a whole on this merger, there must also be a benefit accruing to it. The applicant has not disclosed what that benefit is. 11. According to the applicant, the merger and consequent transfer of all assets and liabilities did not generate any gain. The applicant was in involved circumstances. That is why the merger with the parent company was thought of. On a merger, the transferor is effaced. The transaction undertaken is apparently one sanctioned by Swiss law. The gain if any in this case is not determinable within the scope of section 45 and section 48 of the Act as postulated in the Ruling in Dana Corporation (AAR No.788 of 2008). On a consideration of the facts obta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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