Law:

Section:

Section 47 of the Income-tax Act, 1961 - Capital gains - Transactions not regarded as transfer - Whether transfer of assets from amalgamating foreign company to amalgamated Indian company and transfer of shares held by shareholders in amalgamating company in consideration of allotment to them of shares in amalgamated company pursuant to 'amalgamation' as defined in section 2(1B) are exempt from capital gains tax in India - Held, yes Section 245R of the Income-tax Act, 1961 - Advance ruling - Procedure on receipt of application for - Whether expression 'transaction designed to avoid income-tax' cannot be understood to mean that in course of entering into a transaction, taxpayer is precluded from taking into account tax implications involved and to minimize its tax burden - Held, yes - Whether a design to avoid tax within meaning of clause (iii) of proviso of section 245R(2) apparently covers such of transactions which are sham or nominal or which would lead to inescapable inference of a contrived device solely with a view to avoid tax - Held, yes - Applicants are three non-resident companies and their shareholders - These companies own three Indian TV channels, viz., Star Plus, Star Gold and Star One/Star Utsav - According to applicants, for commercial reasons, they have decided to consolidate Indian TV channels into an Indian company and, accordingly, these companies together with their assets and liabilities shall be amalgamated with and merged into Indian company through a scheme of amalgamation - They have sought advance ruling on their tax liability consequent upon such merger - Revenue contends that entire scheme of amalgamation and transaction as a whole have to be disregarded as they have been devised only to defeat payment of capital gains tax and recovery of outstanding taxes from transferor-companies and, in any case, applications should be kept on hold till scheme is sanctioned by High Court - Whether nothing precludes an applicant to seek ruling in advance in order to have a firm idea of tax implications arising out of proposed amalgamation and, therefore, plea of revenue to decline ruling in view of pendency of proceedings under Companies Act is…

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