Law:

Section:

Section 9, read with sections 148, 163 and 195, of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India - US company AT&T and Indian Birla group company entered into a Joint Venture Agreement (JVA) to form Joint Venture Company (JVC), namely, BCL in which 51 per cent equity shares was to be subscribed and owned by Birla group company while 49 per cent by AT&T-US - Under JVA, shares could be issued in name of 100 per cent subsidiary of founders - Shares of JVC were allotted to AT&T-Mauritius - However, all rights in shares, namely, rights of voting management, sale or alienation were absolutely vested in AT&T-US - Further as per RBI approval in terms of JVA, ownership of shares allotted in name of AT&T-Mauritius was to vest in AT&T-US - Later on, a Tata group company merged with BCL - BCL was renamed as ICL - Shares of AT&T-US were acquired by Cingular Wireless of US and it was renamed as NCWS - Birla group company i.e., Indian Rayon, and Tata group company i.e., TIL, entered into agreement with AT&T-Mauritius and NCWS for purchasing equity shares of ICL from NCWS and MMMH who were holding 100 per cent shares AT&T-Mauritius - Indian Rayon deposited money in bank account of AT&T-Mauritius - On same day, AT&T-Mauritius paid same amount to NCWS - Revenue sought to recover tax from Tata and Birla group companies on profit earned by NCWS/MMMH - Whether income accruing or arising in India to AT&T-US (subsequently NCWS) on transfer of a capital asset situate in India on sale of shares of ICL to Indian Rayon/TIL, would be income deemed to accrue or arise in India to NCWS and could be assessed in hands of US company or in hands of Indian Rayon/TIL as agent of non-resident under section 163 - Held, yes - Whether ordinarily Assessing Officer must not proceed against representative assessee once assessment proceedings are initiated against non-resident but in exceptional cases like instant one, where complex issues are involved relating to computation of capital gains and Assessing Officer is unable to make up his mind on account of suppression of material facts, then, it would be open to Assessing Officer to…

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