TMI Blog2008 (2) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... Member) Thursday, the twenty eighth February Two Thousand-eight A.A.R. NO. 763 OF 2007 Name address of the applicant M/s McLeod Russel Kolkata Ltd., Four Mangoe Lane, Surendra Mohan Ghosh Sarani, Kolkata-700 001 Commissioner concerned Commissioner of Income Tax-III Kolkata Present for the Department None Present for the Applicant Mr. V.S.Wahi, Advocate for Khaitan Co.,1105 Ashoka Estate 24 Barakhamba Road, New Delhi110001 R U L I N G (By Mr. Rao Ranvijay Singh) The applicant, a resident Indian Co., is engaged in the business of plantation and manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... October 2007,and the sale consideration payable for the transfer of shares, was to the tune of Rs.41,49,60,000/-. As stated, the transfer of aforesaid shares could not be effected through the stock exchange. As such, the applicant authorized ICICI Bank Ltd. for arranging and remitting the sale proceeds amounting to Rs.33,24,06,160/- after deducting tax @ 20%, inclusive of the surcharge, on the long term capital gains. Accordingly, the sale proceeds were remitted to the seller on 1.10.2007 through 'Swift' (inter bank transfer). The shares were then credited through off market transaction in the Demat account of the purchaser after the transaction of sale was completed. 3. Placed in the above factual scenario, the applicant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted that the Moron Holdings PLC U.K.(Seller), satisfies all the conditions requisite to attract the proviso to Section 112(1) of Act and therefore the tax on long-term capital gains arising on the sale of original shares as well as bonus shares should be computed @ 10%, as prescribed in the said proviso. The learned counsel has further submitted that the decision of the Authority in the case of TIMKEN FRANCE SAS, in re, 294 I.T.R. 513 (AAR) fully governs the factual as well as legal aspect of the instant case. 7. However, the learned counsel for the applicant has, in course of the hearing, not pressed for an answer to Question No.3. Accordingly no ruling is called for in respect thereof. 8. In the written co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the ratio laid down by the Authority in the case of Timken France (supra) fully covers the instant case. As such, the question raised by the applicant merit to be answered in favour of the applicant. 10. We have addressed ourselves carefully to the rival submissions made and are of the considered opinion that on almost similar facts, the case of TIMKEN FRANCE (Supra) was examined by this Authority at length. This Authority took the view that the benefit of the proviso to section 112(1) of the Act could not be denied to non-residents/foreign companies even if they are entitled to another relief in terms of the proviso to section 48 of the Act. The Authority also held that the proviso to section 112(1) of the Act was a special p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. prescribed by the proviso to section 112(1). The second proviso to section 48 is only a mode of computation of capital gains : it cannot be construed as words of exclusion of a category of assesses, i.e., non-residents who cannot avail of indexation benefit. The protection in terms of the first proviso to section 48 made available to a non-resident might be a justification to deny the benefit of cost of indexation but the same cannot be said of the application of a lesser rate." 11. The stand taken by the revenue is patently contrary to the ruling in Timken France (supra) which considered the same questions and provisions. The only difference in facts between the case of Timken, France and the present case is that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Tea Company (India) Ltd. will be @ 10% in consonance with the proviso to section 112(1) of the Act. In other words, the question is answered in favour of the applicant. Que.No.2 is also answered in favour of the applicant by holding that even in respect of sale consideration arising out of the bonus shares, the tax liability of the non-resident foreign company will be @ 10% only as per the proviso to section 112(1) of the Act. Signed on the 27th day of February,2008 and pronounced the Ruling on 28th day of February,2008. Sd/- Sd/- Sd/- (RAO RANVIJAY SINGH) (JUSTI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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