TMI Blog2009 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso to Section 48 and Rule 115A - 800 of 2009 - - - Dated:- 23-7-2009 - Mr. Justice P. V. Reddi (Chairman) Present for the Department None Present for the Applicant Mr. P. J. Pardiwalla, Sr. Advocate, M. Prakash Kumar, Advocate RULING The applicant is a non-resident Company incorporated in United Kingdom. It is engaged in the business of information technology services. The applicant acquired the shares in Zensar Technologies Limited (for short 'Zensar'), an Indian company by making payments in foreign currency between 1963 and 1994, after obtaining RBI's approval. The applicant states that the shares held by it in the said company constituted 26.55% of the entire capital of Zensar and such shares were held for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions are framed for seeking advance ruling from this Authority: 1. Whether on the stated facts and in law, the rate of tax applicable on the long term capital gains arising on sale of shares of Zensar Technologies Limited will be 10% (plus applicable surcharge and education cess) as per the proviso to section 112(1) of the Act? 2. Whether the beneficial rate of 10% can be applied where the long term capital gain arisen to the Applicant on sale of shares of Zensar Technologies Limited are computed by applying Section 48 of the Income-tax Act read with first proviso to Section 48 and Rule 115A? The questions are overlapping and they can be dealt with together. 3. The answer to the questions calls for interpretation of the first pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee includes any income, arising from the transfer of a long-term capital asset, which is chargeable under the head "Capital gains", the tax payable by the assessee on the total income shall be the aggregate of,— (a) to (b) xx xx xx xx xx xx xx xx xx (c) in the case of a non-resident (not being a company) or a foreign company,— (i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and (ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent ; (d) xx xx xx xx xx xx xx xx xx [Provided that where the tax payable in respect of any income arising from the transfer of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of lesser rate of tax conferred by the proviso to section 112(1) can as well be invoked by a non-resident, like the applicant. The words "before giving effect to 2nd proviso to section 48" only mean that the calculation under the 2nd proviso shall not enter into the computation of capital gain, wherever that proviso is applicable. The said expression cannot be construed as a condition precedent for invoking the proviso to section 112(1). The following passage from Timken France may be usefully quoted in this context: "In plain and peremptory words, the proviso limits the rate of tax on the gains from the transfer of listed securities to 10 per cent, but, with an important rider that the quantum of capital gains should be arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Appellate Tribunal. "H" Bench, Mumbai in ITA No. 2552 of 2005 (BASF Aktiengesellschaft v. Deputy DIT (International taxation) and expressed disagreement with the view taken by the Tribunal. I am told by the learned counsel for the applicant that more than one Bench of ITAT took a different view subsequently. Be that it as may, the rulings cited supra fully cover the issue raised in this application. 6. The Revenue has not furnished any comments, probably, for the reason that the question raised is squarely covered by the previous rulings of this Authority. 7. In the result, both the questions are answered in the affirmative and it is held that the applicant is liable to pay tax at the lesser rate of 10% as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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