TMI Blog2018 (2) TMI 1428X X X X Extracts X X X X X X X X Extracts X X X X ..... bedded in the concept of valuation and merely for this reason the question of capital gains arising in Application cannot be held to be barred by clause (ii) of the proviso to section 245 R(2). Especially so when it is stressed that the questions pertain to the legal admissibility of the transaction and not of any valuation the aspect of profit shifting raised by the Revenue is also unclear in regard to the law from which the inference is drawn - it is merely an assumption on the part of the Department and cannot be considered as a bar. The Departmental Officer sought some more time to make submission in regard to clause (iii) of the proviso to section 245 R(2) and that being declined by this Authority, he requested that the issue may be ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tar US Holdings Subsidiary LLC ( Transferee ), A US entity, would be exempt from capital gains tax in India pursuant to Article 13(4) of the Convention between the Government of the Republic of India and the Government of the Mauritius for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and on capital (hereinafter referred to as India-Mauritius Double Tax Avoidance Agreement the India-Mauritius DTAA )? 2. If the answer to Question No.1 is m the affirmative, the Transferee shall not have any liability to deduct tax at source under section 195 ofthe Income tax Act, 1961(IT Act ) 2. The Department has raised objections to the admission of this Application. It is contended that the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts by the Applicant have been made after obtaining requisite approvals from the Government of India wherever applicable and the shares in S1PL and Scorpio are held since December, 1.995 and October, 2007 respectively. Therefore the Applicant cannot be said to be fly by night company. Reliance in this regard is placed on the decisions JSH (Mauritius) Ltd. (AAR No.995 of 20101 which was upheld by Bombay High Court CIT v. JSH (Mauritius) Ltd. [2017] 84 Taxmann.com 37 (Bom). 4. Department s objection in respect of the third proviso to section 245 R(2) rests on the argument that the ultimate beneficiary of shares of the Indian company is a group based in USA and prima facie the transaction appears designed for avoidance of various tax. Ref ..... X X X X Extracts X X X X X X X X Extracts X X X X
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