TMI Blog2015 (3) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... what is exactly meant by words 'control and management' and the understanding of the word 'prima facie' concluded by holding that the factual scenario projected by the Revenue clearly establishes that the transaction in question was designed prima facie for avoidance of income tax. Accordingly, we decline to entertain the application, which is accordingly, rejected. We find that the impugned order has after recording the submission of the Petitioner and the Revenue concluded that the view canvassed by the Revenue establishes a prima facie design to avoid tax. The impugned order gives no reasons which would indicate why the Petitioner's contention is not acceptable. We do appreciate that very detailed reasons need not be given for a prima facie view but some consideration must be evident from the order. This reasoning is absent in the impugned order. Thus he impugned order suffers from the vice of being an order without reasons. Therefore, the impugned order is quashed and set aside. The Authority shall consider de novo the application of the Petitioner dated 3rd January, 2011. - Decided in favour of assessee. - WRIT PETITION NO. 2149 OF 2014 - - - Dated:- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above equity shares, the Petitioner realized long term capital gains of US$ 75,589,903. The Singapore Company at the time of paying the above sale consideration of US$ 75,589,903 for 15,890,326 equity shares of the Indian Company to the Petitioner had deducted tax at source of US$ 15,960,808 (equivalent Indian Rupees to ₹ 739,304,627) and paid the same to the credit of Government of India as tax deducted at source on long term capital gains. 5. On the aforesaid facts, the Petitioner in its application for advance ruling before the Authority under Section 245 -Q(l) of the Act raised the following question:- Whether the Applicant, a tax resident of Mauritius, is not chargeable to capital gains tax in India under Article 13(4) of the DTAA between India and Mauritius in respect of transfer of 15,890,326 shares of Venture Infotek Global Private Limited, an Indian company, to Atos Origin (Singapore) Pte. Ltd., a corporation, organized and existing under the laws of Singapore. 6. Before considering the rival submissions, it would be useful to reproduce Section 245-R (2) which reads as under:- 245R (1) . . . (2) The Authority may, after examining the applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as under:- Sr. No. Revenue's submission Assessee's submission 1 At the time of the sale of the shares of Indican Company, Mr. Piyush Khaitan was the beneficiary registered outside India. The entire structure outside India came to exist post the incorporation of the Indian Company. The statement that Mr. Piyush Khaitan is the beneficiary through a complex structure of companies is not correct. The holding structure outside India is a decade old and a legitimate structure, which came into existence on account of various globally renowned private equity investors investing in the Petitioner. 2 As per the details submitted by the Petitioner, the board of directors of the Petitioner, consisted of Mr. Dhruv Khaitan and Mr. Piyush Khaitan as directors of the Petitioner. The statement of Respondent that the Board of Directors of the Petitioner consists only of Mr. Dhruv Khaitan and Mr. Piyush Khaitan is factually wrong as the Board of Directors consist of eight directors, Mr. Dhruv Khaitan and Mr. Piyush Khaitan being two of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd which is listed on the Alternate Investment Market in London Stock Exchange. Further, Kubera has also invested in various other companies in India. 9 The Petitioner relinquished the share application amount of ₹ 95.30 Crores lying with Indian Company as grant to it. The statement of the Revenue that the share application money of ₹ 95.30 Crores given by the Petitioner to Indian Company was relinquished and treated as a grant is factually incorrect as the share application money of ₹ 6.09 Crores was originally treated as a grant but on learning that it cannot be treated as a grant, the share application money was refunded by Indian Company to the Petitioner. 10 Various amalgamations and mergers through which the structure was created were never intimated to the regulatory authority. As the mergers were of foreign entities and therefore, were not required to seek approval of RBI. However, pursuant to the discussion with Singapore Company for sale, application was made with RBI for approval and RBI has granted post facto approval. 10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Kranti Associates (P) Ltd v. Masood Alam Khan[2010] 9 SCC 496 has summarized the principles for recording reasons as under: '(a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusion. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint of any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a competent of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior Courts. (h) The ongoing judicial trend in all countries committed to rule of law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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