TMI Blog2005 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... f this application, the applicant is chargeable to tax in India under the provisions of the Income tax Act, 1961 or the agreement for avoidance of double taxation between India and the United Kingdom". 2. In as much as the said common question arises out of identical facts, we shall refer to the facts narrated in the first mentioned application (AAR/647/2004). The applicant is a limited company incorporated in Great Britain and is a tax resident of the United Kingdom (U.K). The applicant was initially a trustee for a group of funds including Invesco Perpetual Global Smaller Companies Fund (Invesco Funds). Those funds were managed by Invesco Funds Managers Ltd., a company incorporated in Great Britain and a tax resident of U.K. The said funds were constituted as Unit Trusts under various trust deeds for the purpose of providing an investment vehicle to investors to earn profits. The applicant was registered with the Securities and Exchange Board of India (SEBI) as a Foreign Institutional Investors (FIIs) under the SEBI (Foreign Institutional Investors) Regulations, 1995 and made investments in Indian securities in accordance with the said regulations. The applicant states that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge in the nomenclature for purposes of continuity of the operations. SEBI approved the change in the name of the Invesco Funds and continuation of portfolio investment in Indian securities by the OEICs. 4. In the comments submitted by the Director of Income-tax (International Taxation), Mumbai, the facts stated by the applicant are not disputed. However the applicant was put to proving the same. The material portion of the comments contained in para 9 reads as follows:- "The assertions made by CTCL above are questions of fact, and as such, may be determined by Id.AAR. The issue of transfer of Indian securities will arise if the applicant fails to establish that:- as trustee of the unit trusts it was the 'owner' of the Indian securities. as 'Depository' of the OEICs, it still is the 'owner' of the Indian securities. the scheme of arrangement is tax exempt in the UK . It is permitted under the UK regulations to act as a 'Depository' and Trustee. In a case of such failure, it is submitted that the Authority may be pleased to hold that the provisions of sec. 2(47) will be attracted and capital gains will arise as a transfer will have taken place." 5. Mr. Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontext otherwise requires, - (47) ["transfer", in relation to a capital asset, includes- the sale, exchange or relinquishment of the asset; or the extinguishments of any rights therein; or the compulsory acquisition thereof under any law; or in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; ] [or] any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immoveable property. Explanation - For the purposes of sub-clauses (v) and (vi), "immoveable property" shall have the same meaning as in clause (d) of section 269UA.] At the outset it may be mentioned that clauses (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpetual Emerging Countries Fund to Citicorp Trustee Company Limited as Depository for INVESCO Perpetual Emerging Countries Fund Citicorp Trustee Company Limited as Trustee for INVESCO Institutional Asia and Australasia Fund to Citicorp Trustee Company Limited as Depository for INVESCO Institutional Asia and Australasia Fund Citicorp Trustee Company Limited as Trustee for INVESCO Perpetual Global Dynamic Theme Fund to Citicorp Trustee Company Limited as Depository for INVESCO Perpetual Global Dynamic Theme Fund Citicorp Trustee Company Limited as Trustee for INVESCO Perpetual International Equity Fund to Citicorp Trustee Company Limited as Depository for INVESCO Perpetual International Equity Fund Citicorp Trustee Company Limited as Trustee for INVESCO Perpetual Asian Fund to Citicorp Trustee Company Limited as Depository for INVESCO Perpetual Asian Fund Please refer to the letter dated May 07, 2004 received from your custodian Citibank regarding the above matter. We do not have any objection to the change in name of the sub-accounts from:- OLD NAME NEW NAME Citicorp Trustee Company Limited as Trustee for INVESCO Perpetual Global Smaller Companies Fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question as to whether the reorganisation enjoys tax exemption in UK would not be germane to the issue of taxability of applicant in India as a result of reorganisation. Nonetheless he had taken us through various provisions of "Income and Corporation Taxes Act 1988" (ICTA) relating to taxation of income and taxation of capital gains which is governed by the "Taxation of Chargeable Gains Act 1992" (TCGA) to show that the reorganisation was not taxable in UK. It will be apt to refer to section 703, 704 and 707 of the ICTA. Section 704 enumerates circumstances under which any tax advantage derived by a person within the meaning of section 703 could be denied or reversed unless the person shows that the transaction was carried out either for bonafide commercial reasons or in the ordinary course of making or managing investments and in either case the main object is not to obtain a tax advantage, otherwise provisions of section 703 deprive him of tax advantages derived by him. Section 707 is an enabling provision under which an application may be made to the Board requesting it to notify that the provisions of sub-section(3) of section 703 will not apply to the proposed transaction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been the position, had the applicant not obtained clearance from the Inland Revenue (Board). The only condition that remains to be examined is condition no. (iv) i.e. whether " It is permitted under the UK regulations to act as a 'Depository' and Trustee". To show that this condition is satisfied it would suffice to refer to the extract of Financial Services Authority Register. FSA Register is a public record of financial services firms and other bodies which fall under its regulatory jurisdiction as defined in the Financial Services Markets Act 2000 of UK , which came into force on December 1, 2001 . It shows that the applicant is registered as FSA and that it has necessary permission to act as a trustee and a depository, which reads as under:- " Financial Services Authority Register 122206 Citicorp Trustee Company Ltd. Permissions Activity Name: Acting as the depository or sole director of an open-ended investment company Customer type: All Limitation: Limited to acting as depository of an ICVC. Activity Name : Acting as trustee of an authorized unit trust scheme Customer type All Activity Name : Agreeing to carry on a regulated activity Limitation : L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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