Law:

Section:

Section 45, read with sections 48 and 92 to 92F, of the Income-tax Act, 1961 - Capital gains - Chargeable as - Applicant (GTRC) is an American company - It is holding company of a Singaporean company GOCPL and holds 74 per cent of total paid up capital of an Indian company GIL - As a part of its global corporate strategy, it is contemplating a reorganization of its investment in its Indian arm, GIL and proposes to enter into a Share Contribution Deed (SCD) to contribute voluntarily entire 74 per cent shares, it holds in GIL, to GOCPL, without any consideration - On these facts it has sought advance ruling on its tax liability in India under section 45 read with section 48 and on applicability of transfer pricing provisions - Whether, on facts, no consideration would accrue or arise to applicant by transfer of shares and applicant cannot be said to have derived any profit or gain from transaction and, therefore, question of applying section 45, read with section 48, would not arise - Held, yes - Whether provisions of sections 92 to 92F will also not be applicable in absence of liability to pay tax - Held, yes Section 56 of the Income-tax Act, 1961 - Income from other sources - Chargeable as - Whether on facts stated under heading 'Capital gains - Chargeable as' GOCPL is liable to tax in India in respect of contribution of shares of GIL, which is a company in which public is substantially interested, to it by GTRC in light of provision of section 56 - Held, no FACTS The applicant (GTRC) is an American company. GOCPL, a company incorporated under the laws of Singapore, is a wholly owned subsidiary of GTRC. GTRC is promoter of an Indian company GIL and holds 74 per cent of the total paid up capital of GIL. As part of its global corporate strategy, the applicant is contemplating a reorganization of its investment in its Indian arm, GIL. It is seeking to expand the role of its Singapore based GOCPL for the benefit of its other group entities within Asia-Pacific Region by making it a financially strong and important entity of the group. Accordingly, it proposes to enter into a Share Contribution Deed (SCD) to contribute voluntarily the entire 74 per cent shares, it…

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