Taxability of capital gains on transfer of shares of a wholly owned Indian subsidiary by a non resident parent company to a non resident

AAR Ruling: Capital gains arising upon the transfer of shares of a wholly owned Indian subsidiary by a non resident parent company to a non resident would not be liable to tax as per the India-Netherlands DTAA [KSPG Netherlands Holding B.V.– AAR No. 818 of 2009].

Facts:

KSPG Netherlands Holding B.V. (applicant), is a company incorporated in Netherlands on November 6, 2008 with its registered office in Amsterdam. PG India is the private limited company incorporated under the Companies Act, 1956 on October 26, 2006, which was held by Pierburg GmbH until November 2008. During November 2008, Pierburg GmbH sold its entire shareholding in PG India to the applicant. The applicant, thereafter, made substantial investments in PG India.

Questions before the Authority for Advance Ruling (AAR):

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