Page 44 - Corporate_Professional_Today

Transfer of assets by NR to resident Indian not

to be deemed as a means of tax avoidance;

Mumbai ITAT rules

Introduction AbhIShEK WOrAh
CA
1. The Income-tax Act, 1961 (the ITA) provides for taxability of income.
Normally the income is taxable in the hands of the person who earns
it (either as accrual or as actual receipt of income). However, there
are some situations, wherein the assessee may be liable to tax in
respect of income, though the same belongs to another person. Some
of these are provisions relating to clubbing of income (sections 60 to
65), taxability of income in the hands of resident where he transfers
assets to non-resident so as to avoid tax (section 93), taxability of
income in the hands of agent (sections 160-163), etc.

In a recent case Tata Industries Ltd. v. Asstt. CIT [2017] 87 taxmann.
com 240 (Mum.-Trib.) the ITAT Mumbai has held that provisions of
section 93 are not applicable where there is no transfer of assets by
resident to non-resident.

Facts of the case

2. Tata Industries (‘Tata’) had a subsidiary in Mauritius called Apex
Ltd. AT&T USA had made investment in a telecommunication JV in
India with Birla Group in 1995, called as Birla AT&T Communications.
The investment was made by AT&T USA through AT&T Cellular
Mauritius Ltd. In the year 2000, Tata and JV entered into a three
way venture agreement pursuant to which Tata Cellular was merged
into Birla AT&T Communications. The new venture was named as
Idea Cellular.
In 2004, Cingular Wireless Group acquired AT&T Wireless Services
and renamed it as New Cingular Wireless. Tata acquired 371 lakh
shares of Idea from New Cingular Wireless for a consideration of
105 million USD. Due to this acquisition of shares AT&T Cellular
Mauritius Ltd. became subsidiary of Tata (now called Apex).
Apex Ltd. was a company incorporated in Mauritius and had a TRC
of Mauritius. Tata along with Apex sold the shares of Idea Cellular
to Birla Group. There was a long-term capital gain on sale of shares.

151
January 20 To January 26, 2018 u Taxmann’s Corporate Professionals Today u Vol. 41 u 45