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BEFORE THE AUTHORITY FOR ADVANCED RULING

(INCOME TAX)

NEW DELHI

February, 2015

AAR No. 100 of 2015

Name and Address of the Applicant: Intaxicate India Private Limited (IIPL),

Bangalore (India)

v.

Respondent (Commissioner Concerned): Commissioner of Income-tax (CIT),

Bangalore (India)

MEMORANDUM FOR THE APPLICANT

-Table of Contents- I

Surana & Surana National Corporate Law Moot Court Competition, 2015

TABLE OF CONTENTS

TABLE OF CONTENTS - - - - - - - - - I

INDEX OF ABBREVIATIONS - - - - - - - - III

INDEX OF AUTHORITIES - - - - - - - - V

STATEMENT OF JURISDICTION - - - - - - - XI

STATEMENT OF FACTS - - - - - - - - XII

STATEMENT OF ISSUES - - - - - - - - XIII

SUMMARY OF ARGUMENTS - - - - - - - - XIV

ARGUMENTS ADVANCED - - - - - - - - 1

1. THE APPLICATION FILED BY IIPL BEFORE THE AUTHORITY FOR ADVANCE

RULING IS MAINTAINABLE - - - - - - - 1

1.1 AAR applications can also be filed by residents as per the ITA - - - 1

1.2 SCN issued under §201, ITA does not bar filing of an application before the AAR 2

a) Proceedings under §195, ITA do not bar application before the AAR - - 2

b) Filing of return is no bar to an AAR application - - - - - 3

1.3 SCN issued in respect of buy-back of shares is improper in law and time barred 4

a) SCN cannot be issued under §201, ITA for failure of payment of DDT - - 4

b) SCN w.r.t buy-back of shares is time barred - - - - - 4

2. THE TRANSACTIONS ENTERED INTO BETWEEN IIPL AND IML ARE GENUINE

TRANSACTIONS - - - - - - - - - 5

-Table of Contents- II


2.1 Efficient tax planning does not constitute sham transactions - - - 5

2.2 The India-Mauritius DTAC provides for tax benefits - - - - 7

3. THE PAYMENTS MADE TO IML BY IIPL BY WAY OF BUY-BACK OF SHARES WILL

BE CAPITAL GAINS AND EXEMPT UNDER A. 13 (4) OF THE DTAC - 8

3.1 Gains arising to IML are in the nature of Capital Gains - - - - 8

3.2 Gains received by IML from such buy-back would not be Dividends as per §2 (22), ITA- 10

4. THE PAYMENTS MADE TO IML BY IIPL ON REDEMPTION OF CCDs WILL BE

CAPITAL GAINS AND NOT LIABLE TO BE TAXED AS INTERESTS - 11

4.1 IML held the CCDs in the nature of Capital Asset - - - - 11

4.2 The redemption of CCDs is ‘transfer’ of a Capital Asset - - - - 13

4.3 The entire consideration received by IML is Capital Gains and not interest - 13

a) CCDs are not fixed return instruments- - - - - - 14

b) The payments do not fall within the definition of interest under § 2(28A), ITA 15

Prayer - - - - - - - - - - XV

-Index of Abbreviations- III


INDEX OF ABBREVIATIONS

§, §§ : Section

¶, ¶¶ : Paragraph, Paragraphs

AIR : All India Reporter

AAR : Authority for Advanced Ruling

ALL ER : All English Reporter

AY : Assessment Year

Azadi Bachao : Union of India v. Azadi Bachao

Andolan (2004) 10 SCC 1

BOM LR : Bombay Law Review

CCD : Compulsory Convertible Debentures

CIT : Commissioner of Income-tax

CompCas : Company Cases

CTR : Current Tax Reporter

DDT : Dividend Distribution Tax, 2003

DIT : Directorate of Income-tax

DTAC : India-Mauritius Double Taxation

Avoidance Convention

HC : High Court

IIPL : Intaxicate India Private Limited

IML : Intaxicate Mauritius Limited

In Re : In Reference

IRC : Inland Revenue Commissioner

-Index of Abbreviations- IV


ITA : Income Tax Act, 1961

ITAT : Income Tax Appellate Tribunal

ITR : Income Tax Reporter

ITA : Income Tax Act, 1961

L.J : Law Journal

M.L.R : Modern Law Review

Mah : Maharashtra

Mad : Madras

Ors : Others

Ramsay : W.T Ramsay v. CIR [1981] STC 174

p. : Page Number

PC : Privy Council

SC : Supreme Court of India

SCALE : Supreme Court Almanac

SCR : Supreme Court Review

SCC : Supreme Court Cases

SCN : Show Cause Notice

Sd/- : Signed

TTJ : Tax Trade Journal

Vodafone : Vodafone International Holdings

v. Union of India (2012) SCC 6 613

w.r.t : With respect to

-Index of Authorities- V


INDEX OF AUTHORITIES

INDIAN CASE LAWS Referred to in

A Mauritius, In Re, (2012) 343 ITR 455 ¶23 -10-

Airports Authority of India, In Re, AAR No. 753-754 of 2007 ¶7 -3-

Ajit Singh Rana v. ACIT, [2014] 61 SOT 251 (Asr) ¶10 -5-

Anarkali Sarabhai v. CIT ¶29 -13-

Armstrong World Industries Mauritius, In Re, AAR No. 1044 of 2011 ¶21 -9-

Banayan & Berry v. CIT, [1996] 222 ITR 831 ¶13 -6-

Banco Products (India) Ltd. v. DCIT, (1997) 59 TTJ 387 (Ahd) ¶26 -12-

Bank of Chettinad Ltd v. CIT, (1940) 8 ITR 522 (PC) ¶12 -5-

Block Development Officer v. ITO, 2010 (5) ITR (Trib) 426 (Delhi) ¶10 -5-

Burmah Castrol Plc v. DIT, [2008] 305 ITR 375 (AAR) ¶6 -3-

Castleton Investment Limited, In Re, AAR No. 999 of 2010, ¶20 -9-

CIT v. Calcutta Discont Co. Ltd, (1974) 3 SCC 260 ¶13 -6-

CIT v. East India Charitable Trust, (1994) 206 ITR 152 (Cal.) ¶27 -12-

CIT v. Satluj Jal Vidyut Nigam, [2012] 345 ITR 552 ¶10 -5-

CIT v. Surat Cotton Spg. and Wvg. Mills (1993) 202 ITR 932, 938 ¶29 -13-

CIT v. Tata Engineering and Locomotive, (2000) 245 ITR 823 (Bom.) ¶6 -3-

CIT, Gujarat v. A. Raman, [1968] 67 ITR 11 (SC) ¶13 -6-

CIT, Kanpur v. Sahara India

Savings and Investment Corporation Ltd., [2010] 321 ITR 371 (SC) ¶26 -12-

D.B. Zwirn Mauritius Trading No 2, In Re, AAR No. 879 of 2010 ¶15, 21 -7, 9-

DGIR v. Deepak Fertilizers & Petrochemicals [1994] 81 CompCas 341 ¶32 -14-

-Index of Authorities- VI


DIT v. Universal International Music B.V, [2013] 214 Taxman 19 (Bom) ¶16 -7-

Dynamic India Fund I, In Re, AAR. No. 1016 of 2010 ¶17 -8-

E Trade Mauritius Ltd, In Re, AAR No. 826 of 2009, ¶15, 21 -7, 9-

Endemol India Private Limited, In Re, AAR. No. 1075 of 2011 ¶3 -2-

Frontier Offshore Exploration (India) Ltd

v. DCIT, (2007) 314 ITR 193 (Mad.) ¶6 -3-

Groupe Industrial Marcel Dassault, In Re, AAR. No. 846 & 847 of 2009 ¶5 -3-

Haji Abdul Kader Sahib v. CIT, (1961) 42 ITR 296 ¶27 -12-

Hindustan Power, In Re, 267 ITR 685 (2004) ¶3 -2-

Hyosung Corporation, Korea,

In Re AAR No. 1138, 1140-1144, 1150 of 2011 ¶7 -3-

Ind Telesoft Private Limited, In Re, AAR No. 543 of 2001 ¶3 -2-

ITO v. Beenaben P. Shah, I.T.A. No. 128/AHD/2013 ¶10 -5-

Jagtar Singh Purewal v. CIT, (2013) 261 CTR 230 ¶7 -3-

KSPG Netherlands Holding B.V, In Re, AAR No. 818 of 2009 ¶16 -7-

M.V. Valliappan v. ITO, [1988] 170 ITR 238 (Mad) ¶13 -6-

M/s Jay Shree Tea & Industries Ltd., In Re, AAR. No. 646 of 2004, ¶3 -2-

Mathuram Agrawal v. State of Madhya Pradesh, (1999) 8 SCC 667 ¶14 -6-

McDowell v. CTO, [1985] 154 ITR 148 (SC) ¶13 -6-

Mersen India Private Limited, In Re, AAR No. 1074 of 2010 ¶3-2-

Mitsubishi Corporation, Japan, In Re, AAR. No. 1309 of 2012 ¶7, -3-

Moody's Analytics Inc., [2012] 24 taxmann.com 41 (AAR) ¶20 -9-

-Index of Authorities- VII


Narendra Kumar Maheshwari

v. Union of India 1989 AIR SC 2138, (2011) 1 SCC 609 ¶32 -14-

Narendra Kumar Maheshwari v. Union of India, 1989 AIR SC 2138 ¶26 -12-

NetApp B.V. v. AAR, [2013] 357 ITR 102 (Delhi) ¶8, -4-

PNB Finance Ltd. v. CIT, (2001) 252 ITR 491 ¶27 -12-

Praxair Pacific Ltd. v. DIT (International Taxation), (2010) 326 ITR 276 ¶20 -9-

S. Raghbir Singh Sandhawalia v. CIT Punjab, [1958] 34 ITR 719 (P&H) ¶13 -6-

Saraswati Holding Corporation, 2009-TIOL-529-ITAT-DEL ¶21 -9-

SEPCO III, In Re, AAR. No. 1009 of 2010 ¶6 -3-

Seth Gwaldas Mathuradas Mohata Trust v. CIT, [1987] 165 ITR 620 (Bom.) ¶29 -13-

Sin Oceanic Shipping ASA v. AAR, (2014) 269 CTR (SC) 15 ¶8 -4-

SmithKline Beecham Port Louis Ltd, In Re, AAR 1004 of 2010 ¶20 -9-

Speciality Magazines Private Ltd. In Re, AAR No. 610 of 2003 ¶3 -2-

Syndicate Bank Ltd.

v. Additional Commissioner of Income Tax, [1985] 155 ITR 681 (Ker.) ¶27 -12-

Transmission Corporation of AP v. CIT, (1999) 7 SCC 266 ¶6 -3-

Union of India v. Azadi Bachao Andolan, (2004) 10 SCC 1 ¶13, 15, 16 -6-7-

Vijaya Bank Ltd. v. ACIT, Bangalore AIR 1991 SC 239 ¶33 -15-

Vodafone International Holdings B.V. v. Union of India, (2012) 6 SCC 613 ¶13 -6-

West Asia Maritime Ltd, In Re, (2008) 111 ITD 155 (Chennai) ¶6 -3-

Willard India Ltd. v. DCIT, (2004) 87 TTJ (Del) 102 ¶26, -12-

Zaheer Mauritius v. Director of Income Tax, (2014) 270 CTR (Del) 244 ¶27, 28 -12, 13-

-Index of Authorities- VIII


FOREIGN CASE LAWS

Barber-Greene Americas v. CIR, (1960) 35 T.C. 365, 383, 384 ¶17 -8-

Commissioner of Inland Revenue

v. Challenge Corporation Ltd, (1987) A.C 167 ¶12 -6-

Commissioners of Inland Revenue v. Pilcher (1949) 31 Tax Cas 314 ¶33 -15-

Duke of Westminster v CIR, [1935] All ER Rep 259 ¶12 -5-

W.T. Ramsay Ltd v. CIR, [1981] STC 174 ¶14 -7-

STATUTES AND RULES

• The Income Tax Act, 1961

• The Companies Act, 1956

• Foreign Exchange Management (Transfer or Issue of security by a person resident outside

India) Regulations, 2000

• Private Limited Company and Unlisted Public Limited Company (Buy-Back of Securities)

Rules, 1992

CIRCULARS/NOTIFCATION

• Circular No. 4/2007 dated 15.6.2007, “Distinction between shares held as stock-in-trade and

shares held as investment-tests for such a distinction”, Central Board of Direct Taxes,

Ministry of Finance.

• Notification No. FEMA 20/2000-RB dated May 3, 2000.

• A.P. (DIR Series) Circular No. 74, RBI/2006-2007/435 dated June 8, 2007.

-Index of Authorities- IX


• CBDT Circular 789 dated 13.04.2000, Clarification regarding taxation of income from

dividends and capital gains under the Indo-Mauritius Double Tax Avoidance Convention

(DTAC).

ARTICLES REFFERED

• G.S.A Wheatcroft, “The Attitude of Legislature and the Courts to Tax Avoidance”, The

Modern Law Review, Issue 3, Vol. 18, May 1995

• “Illustrative cases where GAAR provisions will be considered applicable or not applicable”,

Final Report on General Anti Avoidance Rules (GAAR) in Income-tax Act, 1961, Expert

Committee (2012).

• Karthik Ranganathan, “Gains earned from CCDs in a joint venture are Capital Gains and not

interest income- Delhi HC”, August 19, 2014, Mondaq.com

• T.P Ostwal and Vikram Vijayaraghavan, “Anti-Avoidance Measures”, National Law School

of India Review, Vol. 22(2), 2010

• Patricia Lampreave, “Anti-Tax Avoidance Measures in China and India: An Evaluation of

Specific Court Decisions”, Bulletin for International Taxation, January, 2013

• G. Mahadevan, “Vodafone International Holding -A Critical Review of Pre- and Post-Ruling

Impact and Future Course of Action”, Business Law International, Vol. 13 (2012), 223

• KPMG Tax Assemblage- 2012

BOOKS REFFERED

• 2 Kanga, Palkhiwala and Vyas, The Law and Practice of Income Tax, LexisNexis

Butterworth Wadhwa, 9th ed.

-Index of Authorities- X


• Handbook on Advance Ruling, Authority for Advanced Ruling (Income Tax), New Delhi

(May 2008).

• KB Bhatnagar, Direct Taxes Digest (1922-2011), Butterworths Wadhwa Nagpur, 9th ed.

• Dr. Vinod K Singhania, Dr.Kapil Singhania , Taxmann’s Direct Taxes law & practice,

Taxmann Publications Pvt. Ltd. New Delhi, 5th ed.

• 9 A.C. Sampat Iyengar, Companion to The Law of Income Tax, Bharat law house Pvt. Ltd.,

New Delhi, 2009

• 2 A Ramaiya, Guide to the Companies Act, Butterworths Wadhwa Nagpur, 17th ed.

• 2 S. Rajaratnam, Treatise on Double Taxation Avoidance Agreements, Snow white

Publications Pvt. Ltd., 5th ed.

• TR. Ramamurthy, Bharat’s Guide to FEMA, Bharat Law House New Delhi, 4th ed.

-Statement of Jurisdiction- XI


STATEMENT OF JURISDICTION

The Applicant humbly submits this Memorandum on behalf of Intaxicate India Private

Limited (IIPL) to obtain an Advance Ruling on the transactions undertaken and to be

undertaken.

The Authority for Advance Ruling (Income Tax), New Delhi has the jurisdiction to entertain

the Application filed under Section 245Q of the Income Tax Act, 1961.

-Statement of Facts- XII


STATEMENT OF FACTS

I. IIPL, an Indian company is a 100% subsidiary of IML, a Mauritian company holding a valid

TRC certificate. IML invests in the securities of IIPL which in turn invests in securities of

lucrative companies through stock exchanges. IIPL was a successful company and used to

declare huge dividends to its sole shareholder, IML.

II. However, in 2003 as a commercial strategy it stopped declaring dividends and started to issue

equity shares and buying them back at high premiums. Through this process IML received huge

capital gains every year from the sale of shares which continued till May 2013. From May 2013,

IIPL started to issue CCDs to IML. The terms of CCDs among other things included the option

to pay fixed returns during the lock-in period and the sale consideration that IIPL would be

required to pay at various times in case of redemption of CCDs. IIPL redeemed the CCDs within

a years’ time and as per the agreement paid accumulated interest, premium and additional one

time consideration over the principal amount. The total amount paid by IIPL through this process

ended up being the same as it was paying for the buy-back since past 10 years.

III. On scrutiny of the ROI filed by IIPL, ITD issued a SCN under §201, ITA for non-

withholding of interest payments made to IML under §195, ITA. The SCN also alleged that the

payment on buy-back of shares were actually dividend in the name of capital gains to IML.

IV. Subsequently, IIPL approached the AAR for a ruling that the transactions were legitimate

sale of capital assets taxable only as per the DTAC. It also raised objections on the interference

by ITD on its commercial expediencies. The Revenue argued that the application to AAR would

be barred as per the ITA. Further, the entire transaction was sham designed only to avoid Indian

taxes. Further, the payments made on redemption of CCDs were actually interest payments in the

garb of capital receipts. The matter is now pending before the AAR for final ruling.

-Statement of Issues- XIII


STATEMENT OF ISSUES

The following questions are presented before the Authority:-

1. WHETHER THE APPLICATION FILED BY IIPL BEFORE THE AUTHORITY FOR

ADVANCE RULING IS MAINTAINABLE OR NOT?

2. WHETHER THE TRANSACTIONS ENTERED INTO BETWEEN IIPL AND IML ARE

GENUINE TRANSACTIONS?

3. WHETHER THE PAYMENTS MADE TO IML BY IIPL BY WAY OF BUY-BACK OF

SHARES WILL BE CAPITAL GAINS AND EXEMPT UNDER A. 13 (4) OF THE DTAA?

4. WHETHER THE PAYMENTS MADE TO IML BY IIPL ON REDEMPTION OF CCDs

WILL BE SALE CONSIDERATION AND NOT LIABLE TO BE TAXED AS

INTERESTS?

-Summary of Arguments- XIV


SUMMARY OF ARGUMENTS


RULING IS MAINTAINABLE.

The application is maintainable as a SCN issued for non- withholding of tax under §195, ITA

does not bar the application under the proviso to §245R (2). In addition, IIPL can file an

application to determine the tax liability of IML for transaction undertaken between them.

Further, SCN cannot be issued for failure of payment of DDT.


TRANSACTIONS.

The transactions entered into between IIPL and IML are genuine transactions involving

commercial strategies as a tax planning device which is permissible in law. The Revenue cannot

lift the corporate veil where the benefit accorded to a taxpayer under a tax treaty is sought.

3. THE PAYMENTS MADE TO IML BY IIPL BY WAY OF BUY-BACK OF SHARES

WILL BE CAPITAL GAINS AND EXEMPT UNDER A. 13 (4) OF THE DTAA.

The buy-back was done in accordance with §77A of the Companies Act, 1956 and consequently

the gains arising thereon were Capital Gains as per §46A, ITA. Further, the definition of

dividend under §2(22) does not include the amount paid by a company on purchase of its own

share. Consequently, IIPL is not liable to pay DDT.


CAPITAL GAINS AND NOT LIABLE TO BE TAXED AS INTERESTS.

CCDs were not fixed return instruments and any assured return at the time of exit did not change

the nature of investment made. The amount received consequent to the transfer of CCDs was in

the nature of capital receipts and gains arising from such transfer were Capital Gains.

-Arguments Advanced- 1


ARGUMENTS ADVANCED


RULING (INCOME TAX) IS MAINTAINABLE.

1. The Applicant, Intaxicate India Private Limited (IIPL) has approached the Authority for

Advance Ruling, New Delhi under §245Q, ITA1 to ascertain if there is any tax liability on the

transactions undertaken and to be undertaken by it.2 The arguments of the Applicant on

maintainability of the application are threefold, namely: Firstly, AAR applications can also be

filed by residents as per the ITA; Secondly, SCN issued under § 201 of the ITA does not bar the

filing of application before the AAR and Thirdly, SCN issued in respect of buy-back of shares is

improper in law and time barred.

1.1 AAR applications can also be filed by residents as per the ITA

2. The ITD has contended that AAR should maintain applications filed only by non-residents as

per the ITA.3 The Applicant submits that as per §245N (b) (ii), ITA, residents can also obtain an

“advanced ruling” in relation to the tax liability of a non-resident.4 IIPL is a “resident”5 as per §

6 (3) (i), ITA6 being a company incorporated under the Indian Companies Act, 1956 and hence is

entitled to seek an advance ruling for the transactions undertaken and to be undertaken.

1 §245Q, ITA- Application for advance ruling- (1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner as may be prescribed (…).

2 ¶8, Case Data.

3 ¶9, Case Data.

4 §245N (a) (ii), ITA- "advance ruling" means, a determination (..) in relation to [the tax liability of a non-resident arising out of] a transaction which has been undertaken or is proposed to be undertaken by a resident applicant with [such] non-resident. See also, Handbook on Advance Ruling, Authority for Advanced Ruling (Income Tax), New Delhi (May 2008), p. 6, 7, 15.

5 §2 (42), ITA- In this Act, unless the context otherwise requires, "resident" means a person who is resident in India within the meaning of §6.

6 §6 (3) (i), ITA- A company is said to be resident in India in any previous year, if- (i) it is an Indian company.



3. This Authority in Endemol India Private Limited, In Re7 had admitted the AAR application

filed by resident applicant Endemol to ascertain the tax liability of Endemol Holding B.V, a non-

resident and in Ind Telesoft Private Limited, In Re8 to determine the tax liability of Telesoft Inc.,

USA, filed by the resident company. This authority recognised the difference between

determination of tax liability of a resident with a non-resident and negated Hindustan Power, In

Re9 by stating that where the application concerning is for non-residents’ tax liability, AAR

should maintain such applications.10

4. The buy-back and redemption of CCDs, being “transactions undertaken”, involve the

ascertainment of tax liability of a non-resident, i.e. IML, consequent of which the liability to

withhold tax under §195, ITA11 could have arisen. Therefore, the Applicant submits that the

application filed by IIPL is well within the provisions of §245N, ITA.

1.2 SCN issued under §201, ITA does not bar filing of an application before the AAR

a) Proceedings under §195, ITA do not bar application before the AAR

5. The ITD argues that the entire amount paid by IIPL on redemption of CCDs and on buy-back

of shares, necessitate the withholding of tax under §195, ITA12 pursuant to which, SCN has been

issued to IIPL under §201. The ITD contends that issuing of SCN is a proceeding that “is already

7 AAR No. 1075 of 2011.

8 AAR No. 543 of 2001.

9 267 ITR 685 (2004).

10 M/s Jay Shree Tea & Industries Ltd., In Re, AAR No. 646 of 2004. See also, Speciality Magazines Private Ltd, In Re, AAR No. 610 of 2003; Mersen India Private Limited, In Re, AAR No. 1074 of 2010.

11 §195 (1), ITA- Any person responsible (..) provided further that no such deduction shall be made in respect of any dividends referred to in § 115-O; Inserted by the Finance Act, 2003, w.e.f. 1-4-2003.

12 ¶8, Case Data.



pending before any Income-tax authority”, thereby creating a bar under §245R (2) (i), ITA13. The

Applicant submits that where a bar under §245R (2) (i) is created, the right of the Applicant to

approach the AAR would be stalled. However, the AAR has consistently taken a view that a

proceeding under §195 or §197, ITA would not create a bar to entertaining an application for

advance ruling.14

6. The Supreme Court in Transmission Corporation of AP v. CIT15 while making a reference to

the scheme of §195 held that, “the said provision is for tentative deduction of income-tax thereon

subject to regular assessment and by the deduction of income-tax, rights of the parties are not, in

any manner, adversely affected”. The Applicant submits that deduction and withholding of tax is

in the nature of tentative determination and the final view has to be taken in the course of regular

assessment. This Authority in Burmah Castrol Plc v. DIT16 has observed that “the order passed

under §195 or §197 is a tentative measure and does not in any way fetter the jurisdiction of this

Authority to proceed with the application.” Further, in SEPCO III, In Re17 the AAR reaffirmed

the aforementioned observation that mere pendency of a proceeding under §195 or §197, ITA

does not stand in the way of an AAR application being entertained.

13 §245R (2) (i), ITA - Provided that the Authority shall not allow the application where the question raised in the application, (i) is already pending before any income-tax authority.

14 Groupe Industrial Marcel Dassault, In Re, AAR No.846 & 847 of 2009.

15 (1999) 7 SCC 266. See also, Frontier Offshore Exploration (India) Ltd v. DCIT, (2007) 314 ITR 193 (Mad.); West Asia Maritime Ltd, In Re, (2008) 111 ITD 155 (Chennai).

16 [2008] 305 ITR 375 (AAR). See also, CIT v. Tata Engineering and Locomotive, (2000) 245 ITR 823 (Bom.).

17 AAR No. 1009 of 2010.



7. The Applicant concludes that only where a notice under §143 (2) or §142 (1), ITA are issued,

the bar under §245R (2) would be attracted.18 Therefore, any proceedings under §195, ITA shall

not be construed to mean proceeding as “pending before any income tax authority”.19

b) Filing of return is no bar to an AAR application.

8. Whilst the ITD may rely on NetApp B.V. v. AAR20 to state that filing of return is a bar to AAR

proceedings, the Applicant submits that the aforementioned judgment has been set aside by the

Supreme Court in Sin Oceanic Shipping ASA v. AAR21 and filing of return is now no bar to AAR

proceedings.

1.3 SCN issued in respect of buy-back of shares is improper in law and time barred

a) SCN cannot be issued under §201, ITA for failure of payment of DDT

9. IIPL is issued a notice under §201, ITA for non-deduction of tax under §195, ITA alleging that

the buy-back of shares for the past 10 years was only repatriation of profit.22 The proviso to §195

(1) specifically states that no deduction under this section shall be made in respect of any

dividends referred to in §115-O, ITA23. §201 is attracted where any person is “required to

deduct any sum in accordance with the act”. However, since payment of DDT under §115-O is

excluded from the preview of §195 and that §115-O does not require deduction of tax, §201

cannot be attracted.

18 Hyosung Corporation, Korea, In Re, AAR No. 1138, 1140-1144, 1150 of 2011. See also, Mitsubishi Corporation, Japan, In Re, AAR No. 1309 of 2012, Jagtar Singh Purewal v. CIT, (2013) 261 CTR 230.

19 Kanga, Palkhiwala and Vyas, The Law and Practice of Income Tax, Vol. II, 9th ed., LexisNexis Butterworth Wadhwa, p. 2265. See also, Airports Authority of India, In Re, AAR No. 753-754 of 2007, ¶13.

20 [2013] 357 ITR 102 (Delhi).

21 (2014) 269 CTR (SC) 15.

22 ¶7, Case Data.

23 §115-O, ITA- Notwithstanding anything contained (…) shall be charged to additional income-tax (hereafter referred to as tax on distributed profits) at the rate of 15%.



b) SCN w.r.t buy-back of shares is time barred

10. The ITD has issued the SCN for failure to withhold tax from AY 2003-04 and till PY 2013-

1424. The Applicant submits that as per §201 (3), ITA25, no order under §201 deeming a person

to be an assessee-in-default, can be made after the expiry of a time period of six years. Thus, the

notice issued under §201 could have only been valid had it been issued on or before 2010.26 The

Applicant had lawfully bought back shares issued to IML since 2003 as a commercial strategy

and if the ITD had genuine concerns on the buy-back of shares, it had the opportunity to issue

notice any time before 2013. Therefore, placing reliance on the aforementioned argument and

authorities, the Applicant pleads the maintainability of the AAR application.


TRANSACTIONS.

11. The Applicant submits that the buy-back of shares and redemption of CCDs were genuine

transactions involving commercial strategies, as a tax planning device and not for the purpose of

evasion of tax. The arguments of the Applicant are twofold, namely: Firstly, Efficient tax

planning does not constitute sham transactions and Secondly, India-Mauritius DTAC provides

for tax benefits.

2.1 Efficient tax planning does not constitute sham transactions

12. The Applicant submits that the transactions entered into between IIPL and IML are genuine

transactions which do not violate any provision of the ITA or any other law for the time being in

force. The ITD has contended that the entire transaction was sham as it were undertaken only to 24 ¶7, Case Data.

25 §201 (3), ITA- No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct (…) after the expiry of seven years (…).

26 Block Development Officer v. ITO, 2010 (5) ITR (Trib) 426 (Delhi), ¶4. See also, CIT v. Satluj Jal Vidyut Nigam, [2012] 345 ITR 552; Ajit Singh Rana v. ACIT, [2014] 61 SOT 251 (Asr), ¶9.2; ITO v. Beenaben P. Shah, I.T.A. No. 128/AHD/2013, ¶5.



avoid income-tax, the Applicant submits that tax avoidance is the art of dodging tax without

actually breaking the law.27 Lord Tomlin in the landmark case of Duke of Westminster v CIR28,

had observed that “Every man is entitled if he can to order his affairs so that the tax attaching

under the appropriate Acts is less than it otherwise would be”. It is submitted that tax mitigation

shall not be construed to mean tax avoidance.29

13. Whilst the ITD may rely on McDowell v. CTO30, the Applicant submits that the proper

interpretation of the judgment was observed in M.V. Valliappan v. ITO31 and affirmed in Union

of India v. Azadi Bachao Andolan32 that every attempt at tax planning or every transaction,

perfectly permissible under law, cannot be construed to as one meant for evasion of tax. Azadi

Bachao was affirmed by Vodafone International Holdings B.V. v. Union of India33 which ruled

that every tax payer is not bound to choose that pattern which will replenish the treasury. The

taxpayer is at the liberty to decrease his taxes by the arranging his commercial affairs, so far as

the law permits him.34 The Applicant submits that it changed its nature of transactions only as a

commercial strategy and revenue cannot interfere with the commercial expediencies of the

taxpayers, unless there has been an express violation of law.

27 G.S.A Wheatcroft, “The Attitude of Legislature and the Courts to Tax Avoidance”, The Modern Law Review, Issue 3, Vol. 18, (May 1995), p. 210.

28 [1935] All ER Rep 259. See also, Bank of Chettinad Ltd v. CIT, (1940) 8 ITR 522 (PC).

29 Commissioner of Inland Revenue v. Challenge Corporation Ltd, (1987) A.C 167.

30 [1985] 154 ITR 148 (SC).

31 [1988] 170 ITR 238 (Mad).

32 Azadi Bachao, (2004) 10 SCC 1. See also, Banayan & Berry v. CIT, [1996] 222 ITR 831.

33 (2012) 6 SCC 613; See also, CIT v. George Williamson (Assam) Ltd, [2004] 265 ITR 626 (Gauhati).

34 CIT, Gujarat v. A. Raman, [1968] 67 ITR 11 (SC). See also, S. Raghbir Singh Sandhawalia v. CIT Punjab, Pepsu and Himachal Pradesh, [1958] 34 ITR 719 (P&H). See also, CIT v. Calcutta Discont Co. Ltd, (1974) 3 SCC 260.



14. The Applicant submits that in a taxing statute, it is not possible to assume any intention or

governing purpose of the statute more than what is stated in the plain language.35 In W.T.

Ramsay Ltd v. CIR36 it was observed that “where a document or transaction is genuine, the court

cannot go behind it to some supposed underlying substance”. Thus, the ITD’s assertion that the

change in nature of transactions to avoid taxes stands is untenable in law.

2.2 The India-Mauritius DTAC provides for tax benefits.

15. The Applicant submits that the India Mauritius DTAC37 provides for tax benefits and the tax

payer is entitled in law to seek the benefit under the DTAC, if the provision therein is more

advantageous than the corresponding provision in the domestic law.38

16. The ITD may contend that the IML is a conduit for tax avoidance, the Applicant relies on

CBDT Circular 789 dated 13.04.200039 which states that companies which are Category 1

Global Business License holding company with TRC issued by the Mauritian Tax Authorities40,

are entitled to claim treaty benefits. The validity of the circular was upheld in Azadi Bachao and

also held that a TRC shall be a conclusive proof that a tax payer is a resident of a particular

country which has issued the TRC.41 It is submitted that IML was the beneficial investor in the

35 Mathuram Agrawal v. State of Madhya Pradesh, (1999) 8 SCC 667. See also, Supra 27 (Wheatcroft), p. 214.

36 [1981] STC 174.

37 Agreement for avoidance of double taxation and prevention of fiscal evasion with Mauritius, GSR No. 920(E), dated 06/12/1983.

38 D.B. Zwirn Mauritius Trading No 2, In Re, AAR No. 879 of 2010. See also, E Trade Mauritius Ltd, In Re, AAR No. 826 of 2009; Azadi Bachao, (2004) 10 SCC 1.

39 CBDT Circular 789 dated 13.04.2000, Clarification regarding taxation of income from dividends and capital gains under the Indo-Mauritius Double Tax Avoidance Convention (DTAC).

40 ¶2, Case Data. See also, “Guide to Global Business”, Financial Service Commission, Mauritius, Chapter-1, p. 10.

41 Supra 32 (Azadi Bachao), ¶52-53. See also, DIT v. Universal International Music B.V, [2013] 214 Taxman 19 (Bom).



securities of IIPL and the fact that IIPL was its wholly owned subsidiary, cannot be construed to

mean that IML was deliberately set up to avoid the tax liability relating to capital gains.42

17. Whilst the ITD may contend that the transaction has been entered into for profit repatriation,

the Applicant submits that in the light of Dynamic India Fund I, In Re43, IIPL-IML cannot be

denied the benefit of treaty benefits, merely because it operated in a way as to obtain such

benefits.

3. THE PAYMENTS MADE TO IML BY IIPL BY WAY OF BUY-BACK OF SHARES

WILL BE CAPITAL GAINS AND EXEMPT UNDER A. 13 (4) OF THE DTAC.

18. The Applicant has approached this authority to ascertain if they are liable to pay DDT for the

buy-back of shares from 2003-2013. The submissions of the Applicant are twofold, namely:

Firstly, Gains arising to IML are in the nature of Capital Gains and Secondly, Gains received

by IML from such buy-back would not be Dividends as per §2 (22), ITA.

3.1 Gains arising to IML are in the nature of Capital Gains

19. The Applicant has bought back the shares from the year 2003 till 2013 in terms of §77A,

Companies Act, 195644. The buy-back was for commercial reasons since the Applicant needed

investments year on year as the Indian markets just started to flourish in 2003.45 §46A, ITA

states that where a shareholder receives any consideration from any company on purchase of its

own shares, then subject to provisions of §48, it shall be deemed to be Capital Gains. As §46A is

a specific provision relating to buy-back of shares, any payments made in pursuance of buy-back

of shares shall be treated only in the manner as specified under the section. 42 KSPG Netherlands Holding B.V, In Re, AAR No. 818 of 2009, ¶3.2.

43 AAR No. 1016 of 2010. See also Barber-Greene Americas v. CIR, (1960) 35 T.C. 365, 383, 384. Supra 32 (Azadi Bachao), ¶140.

44 §77A, Companies Act, 1956- Power of company to purchase its own securities.

45 ¶3, Case Data.



20. The Applicant submits that in the instant case, IIPL has bought back the shares issued to

IML, the payment of which has resulted in Capital Gains to IML. IML, a tax-resident of

Mauritius, holding a valid TRC, is entitled to claim the benefit of the DTAC.46 A.13 of the

DTAC is the charging provision to determine the taxability of Capital Gains. By virtue of A.

13(4) of the DTAC47, any such Capital Gains would be taxable only in Mauritius.48 Therefore,

the Capital Gains arisen to IML on buy-back of shares would be exempt from taxation in India.

21. This authority in D.B. Zwirn Mauritius Trading, In Re49, while placing reliance on E* Trade

Mauritius, In Re50 and Saraswati Holding Corporation v. DCIT51, had observed that the gains

arising out of alienation of shares of an Indian Company to a company who is a resident of

Mauritius is liable to tax only in Mauritius in terms of A. 13(4) of the DTAC. Whilst the ITD

may contend that the transactions would be taxable in India, the Applicant relies on this

authority’s ruling in Dynamic India Fund I, In Re52, which held that where the assets proposed to

be transferred come under the purview of A. 13(4) of the DTAC, “going by the decision in Union

of India vs. Azadi Bachao Andolan, it has to be held that the gain that may arise to the applicant

is not chargeable to tax in India” The Applicant also relies on this authority’s ruling in

46 §90 (2), ITA- Where the Central Government has entered into an agreement with the Government of any country outside India (…) for granting relief of tax (…) then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.

47 §13 (4), ITA- Gains derived by a resident of a Contracting State from the alienation of any property other than those mentioned in paragraphs (1), (2) and (3) of this article shall be taxable only in that State.

48 Moody's Analytics Inc. [2012] 24 taxmann.com 41 (AAR). See also, Castleton Investment Limited, In Re, AAR No. 999 of 2010; SmithKline Beecham Port Louis Ltd, In Re, AAR No. 1004 of 2010; Praxair Pacific Ltd. v. DIT (International Taxation), (2010) 326 ITR 276 (AAR), ¶6.1.

49 AAR No. 878 of 2010, ¶3.

50 AAR No. 862 of 2009.

51 (2007) 111 TTJ Delhi 334.

52 Supra 43 (Dynamic), ¶10



Armstrong World Industries Mauritius, In Re53, wherein this authority held, “the capital gains

arising out of the proposed buy-back of shares is not taxable in India in view of paragraph (4) of

article 13 of the DTAC between India and Mauritius.”54

3.2 Gains received by IML from such buy-back would not be Dividends as per §2 (22), ITA

22. The ITD in the SCN has alleged that buy-back of shares was repatriation of profit which is

dividend in the hands of IML in the name of Capital Gains. The Applicant submits that §2 (22)

(iv), ITA specifically excludes buy-back of shares from the definition of dividends. It is submitted

that by virtue of §46A, ITA and the amended definition of dividend under §2 (22) (iv), ITA55,

any income arising on buy-back of shares would be Capital Gains. The argument of the Revenue

that the payment made to IML would be dividends in the name of Capital Gain stands negated.

23. Whilst the ITD may rely on this authority ruling in A Mauritius, In Re56, the Applicant

submits that factual matrix differs in the two cases. The Company, Otis India Ltd., chose Otis

Mauritius over other holders (Otis US (48.87%) & Otis Singapore (27.37%)) for buy-back and

failed to assert any commercial reason for the same. The Applicant asserts that IML, from whom

the buy-back was done is the sole shareholder and requests the authority to differ from the afore-

cited case.

24. The Applicant submits that the Expert Committee Report on GAAR provisions has discussed

a similar case where a company resorted to buy-back of shares from 2003 than distributing

dividends. It was observed therein, “payment of dividend to its shareholder or buy-back of its

shares out of the accumulated reserves is a business choice of a company and the shareholder is 53 AAR No. 1044 of 2011, ¶9

54 Ibid, ¶11.

55 §2 (22) (iv), ITA- (..) dividend does not include any payment made by a company on purchase of its own shares in accordance with the provisions contained in section 77A of the Companies Act, 1956.

56 AAR No. P of 2010; (2012) 343 ITR 455.



entitled to a treaty benefit which exempts Capital Gains.”57 The Applicant submits that the

proposed GAAR provisions are stricter than the present provisions and do not permit any kind of

tax benefit. But if according to the proposed GAAR provisions such an arrangement cannot be

considered to be for the purpose of tax avoidance58, the Applicant fails to see any reason as to

how this is a tax avoidance arrangement in the instant case. The Applicant submits that the

payments made to IML are only in the nature of Capital Gains and the Revenue is incorrect in

holding that they are dividends, requiring payment of DDT.


CAPITAL GAINS AND NOT LIABLE TO BE TAXED AS INTERESTS.

25. The submissions of the Applicant with regards to the payments made to IML on the

redemption of CCDs are threefold: Firstly, IML held the CCDs in the nature of capital asset,

Secondly, Redemption of CCDs is ‘transfer’ of a capital asset and Thirdly, The entire

consideration received by IML for such transfer is capital gains and not interest payments.

4.1 IML held the CCDs in the nature of capital asset

26. The RBI vide its notification59 dated June 8, 2007 has clarified that the instruments which are

fully or mandatorily convertible into equity, would be reckoned as a part of equity under the FDI

policy and eligible to be issued to a person resident outside India under the FDI scheme.60 The

Applicant submits that IML had made an investment in CCDs issued by IIPL which were

57 Example 12A, Illustrative cases where GAAR provisions will be considered applicable or not applicable, Final Report on General Anti Avoidance Rules (GAAR) in Income-tax Act, 1961, Expert Committee (2012), p. 72.

58 Ibid.

59 A.P. (DIR Series) Circular No. 74, RBI/2006-2007/435 dated June 8, 2007.

60 Regulation 5(1) of Foreign Exchange Management (Transfer or Issue of security by a person resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000.



mandatorily convertible after the lock-in period. Thus, such investment in CCDs cannot be

treated as mere loans or advances61 as per the aforementioned RBI notification.

27. However, the determination whether the gain on transfer of such CCDs is a capital gain or

not depends entirely on whether such debentures are capital assets in the hands of its holder.62 §

2(14), ITA63 defines Capital Asset as “property of any kind held by an assessee, whether or not

connected with his business or profession...” For the purpose of income tax, the term Capital

Asset includes every kind of property as generally understood except those that are expressly

excluded from the definition.64 In CIT v. East India Charitable Trust,65 it was held that

“Investments in shares” are a kind of property since they do not fall within the exclusionary limb

of the definition. The Circular issued by CBDT clarifies that ordinarily where the object of the

investment in shares of a company is to derive income by way of dividend etc. then the profits

accruing by change in such investment (by sale) will yield capital gain and not revenue receipt.66

28. The Applicant submits that in the present case the terms of issuance gives weight to the fact

that the CCDs were investments made by IML since it were issued with a lock-in period of 5

61 Narendra Kumar Maheshwari v. Union of India, 1989 AIR SC 2138. See also CIT, Kanpur v. Sahara India Savings and Investment Corporation Ltd, [2010] 321 ITR 371 (SC), ¶12; Willard India Ltd. v. DCIT, (2004) 87 TTJ (Del) 102; Banco Products (India) Ltd. v. DCIT, (1997) 59 TTJ 387 (Ahd).

62 Zaheer Mauritius v. Director of Income Tax, (2014) 270 CTR (Del) 244.

63 §2 (14), ITA- "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession(…).

64 Syndicate Bank Ltd. v. Addl. CIT, [1985] 155 ITR 681 (Ker.). See also, PNB Finance Ltd. v. CIT, (2001) 252 ITR 491; Haji Abdul Kader Sahib v. CIT, (1961) 42 ITR 296, p. 304 (Ker.); CIT v. East India Charitable Trust, (1994) 206 ITR 152 (Cal.), p. 163.

65 (1994) 206 ITR 152.

66 Circular No. 4/2007 dated 15.6.2007, “Distinction between shares held as stock-in-trade and shares held as investment-tests for such a distinction”, Central Board of Direct Taxes, Ministry of Finance. See also, Fidelity Northstar Fund, In Re, [2007] 288 ITR 641 (AAR).



years with the option of selling them to third parties.67 The fact that the call option was exercised

by the applicant within a year’s time would not re characterize the nature of investment made by

IML. The call option was one of the terms of the agreement between the parties and the existence

of such an option cannot alter the nature of the investment.68 Therefore, the CCDs were held in

the form of Capital Assets within the meaning of §2(14), ITA.

4.2 The redemption of CCDs is ‘transfer’ of a Capital Asset

29. The Applicant submits that redemption of CCDs is a transfer of capital assets and

consequently any gains from such a ‘transfer’ would be Capital Gains for IML. The term

“transfer” has been defined to include any sale, exchange or relinquishment of the asset or the

extinguishment of any rights therein.69 In Anarkali Sarabhai v. CIT70, the Supreme Court held

that any redemption of shares or debentures would be a transfer as per §2(47), ITA thereby

attracting Capital Gains tax. While relying on Azadi Bachao71, the Applicant submits that even

though the sale of CCDs would have been capital gains as per the ITA, IML is entitled to seek

the benefit accorded under A. 13(4) of the DTAC.

4.3 The entire consideration received by IML is Capital Gains and not Interest

30. Whilst the ITD may contend that the entire payment made on redemption of the CCDs is

nothing but interest payments made to IML72, the Applicant submits that the entire consideration

67 ¶4, Case Data.

68 Supra 62 (Zaheer Mauritius).

69 §2(47), ITA- transfer in relation to a capital asset, includes, (i) the sale, exchange or relinquishment of the asset.

70 AIR 1997 SC 1677. See also, Seth Gwaldas Mathuradas Mohata Trust v. CIT, [1987] 165 ITR 620 (Bom.); CIT v. Surat Cotton Spg. And Wvg. Mills (P.) Ltd., (1993) 202 ITR 932, 938.

71 Supra 32 (Azadi Bachao)

72 ¶7, Case Data.



paid consequent to such redemption is in the nature of capital receipts in the hands of IML

which do not require any withholding of tax under §195, ITA.

a) CCDs are fixed return instruments.

31. The nature of payments made to IML can be ascertained by noting the relevant terms of issue

of CCDs. The CCDs were issued for a period of five years on which IIPL may or may not have

paid fixed rate of returns and if such returns were to be paid, it had the option to pay them as

accumulated interests. Further, if IIPL intended to buy-back such CCDs, the sale consideration

would be payment of principal, accumulated fixed rate of return & premiums.73

32. The Applicant submits that a conjoint reading of the aforementioned terms of the agreement

cannot be read to mean that IML was entitled to a fixed return on investment on CCDs. The

agreement only entitles IML to sell the CCDs at a price to be computed in the manner as

provided in the clause. It was not obligatory on the part of IML or IIPL to exercise such an

option. In the event that such an option was not exercised until the lock in period the CCDs held

by IML would mandatorily be convertible into equity shares entitling the benefits that would

accrue to an equity shareholder. Upon such conversion, there cannot be any question of any

interest payment since the nature of securities has been changed to pure equity and the borrower

would be under no obligation to repay the amount so lent in the form of CCDs.74 The pre mature

exit options and the amount of return assured at the time of exit are clearly commercial

agreements entered between the parties which cannot change the legal nature of the transaction

so entered between the parties.75

73 ¶5, Case Data.

74 DGIR v. Deepak Fertilizers & Petrochemicals Corporation Ltd., [1994] 81 CompCas 341. See also, Supra 61 (Narendra Kumar Maheshwari).

75 Supra 62 (Zaheer Mauritius), ¶34.



b) The payments do not fall within the definition of interest under § 2(28A) of ITA

33. In Zaheer Mauritius v. DIT,76 the Delhi HC observed “if a debenture is held as a capital

asset, the expression ‘interest’ as defined in §2(28A)77 cannot apply to all gains that are received

by a debenture holder irrespective of the transaction resulting in such gains.” Further, in Vijaya

Bank Ltd. v. ACIT, Bangalore,78 it was held that “whatever was the consideration assessee paid

to purchase the securities (which included interest), the price paid for them was in the nature of a

capital outlay and not revenue expenditure…” The additional sale consideration was in the

nature of penalty and therefore cannot be treated as “interest” in the light of Genesis Indian

Investments Ltd. v. CIT79.

34. The Applicant submits that merely because the sale consideration makes a reference to fixed

rate of return as an index for arriving at the sale consideration, the payments made to IML would

not be re characterized as interest payment. The revenue cannot re-characterize any payments

from one kind to the other like it is sought to be done in the present case. It would be permissible

only when GAAR provisions come into effect.80 Once it is established that there has been a

transfer of capital assets pursuant to which any gain has arisen to a Mauritian entity, such gains

shall be treated as Capital Gains and consequently not liable to be taxed in India. Thus, the

contentions of ITD on merits, stands negated. 76 Ibid, ¶13.

77 §2(28A), ITA- "interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised.

78 AIR 1991 SC 239, ¶ 5. See also, Commissioners of Inland Revenue v. Pilcher, (1949) 31 Tax Cas 314.

79 [2013] 145 ITD 1 (Mum).

80 Karthik Ranganathan, Gains earned from CCDs in a joint venture are Capital Gains and not interest income- Delhi HC, August 19, 2014. <http://www.mondaq.com/india/x/335180/withholding+tax/Gains+Earned+From+Sale+Of+CCDs+In+A+Joint+Venture+Are+Capital> (last accessed on January 10, 2015)

-Prayer- XV


PRAYER

For all the reasons as cited in the Arguments Advanced and through the authorities cited, and for

all those reasons that will be urged at the time of the hearing of the present Application,

Applicant humbly prays the Authority for Advanced Ruling to declare that:

1. The present application is maintainable;

2. The transaction has been entered into as a commercial strategy and is not intended to evade

Indian tax laws;

3. The amount paid by IIPL to IML from April 2003 to May 2013 on buy-back of shares would

be exempt under Article 13 (4) of the DTAC and the Applicant is not liable to pay DDT,

interest and penalties for the aforementioned period and;

4. The amount paid by IIPL to IML on the entire gains arising on the sale of CCDs would be

exempt under Article 13 (4) of the DTAC being Capital Gains and are not required to pay any

withholding tax, interest and penalty on the sale of CCDs made in March 2014.

And pass any other order which this Authority may deem fit in the light of justice, equity and

good conscience.

On behalf of

Applicant- Intaxicate India Private Limited (IIPL)

Counsels for the Applicant

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