TMI Blog2006 (11) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... wned subsidiary of M/s IJM Corporation Berhad, a foreign company incorporated in Malaysia (for short the holding company ). It is stated that the holding company is having 97.31% of paid up equity of the applicant. The holding company was awarded the contract of Civic Centre construction work at Jawahar Lal Nehru Marg, Minto Road, New Delhi by the Municipal Corporation of Delhi (MCD). The holding company has sub-contracted the work of Civic Centre construction to the applicant. In the application against column 6, it is stated that the construction work is in progress. On these facts, the applicant seeks advance ruling of the Authority on the following question: Whether the Civic Centre Construction Work awarded by the MCD is liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholder has to be there in the applicant, the holding company should have not less than 99% shares in the applicant to be treated as a wholly owned subsidiary of the holding company. 4. To appreciate the grounds of rejection, we refer to the definitions of advance ruling and applicant in clauses (a) and (b) respectively of section 96A of the Service Tax, which read as under: Section96A. Definitions- In this Chapter, unless the Context otherwise requires,- (a) advance ruling means the determination, by the Authority, of a question of law or Fact specified in the application regarding the liability to pay service tax in relation to a se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Companies Act. To be a wholly owned subsidiary of another company, in addition to satisfying the requirements of sub-section (1) and (3) of section 4of the Companies Act the holding company shall hold all the equity shares of the subsidiary company. The requirements of a foreign holding company and an Indian subsidiary company are contained in sub-section (7) of Section 4 of the Companies Act which reads as under:- Sub-section (7) of Section 4 of the Companies Act A private company, bring a subsidiary of a body corporate incorporated outside India, which, if incorporated in India, would be a public company within the meaning of this Act, shall be deemed foe the purposes of this Act to be a subsidiary of a public company if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by person other than the foreign holding company and the balance of 99 shares have to be held by the foreign holding company. As admittedly in this case the foreign company which claims to be the holding company, is not having 99% but only 97.31% shares in The applicant it is difficult to treat the applicant as a wholly owned subsidiary Indian company of the foreign holding company. 5. Another formidable ground i.e. the second ground in the show cause notice is that the service in relation to which the advance ruling is sought has already been commenced, stares at the applicant. We have noted above that the applicant has mentioned against Column 6 in the application that construction work is in progress . We have already quot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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