Case Law Details
Dimexon Diamonds Ltd Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that business restructuring entered into by an enterprise with its associated enterprise for eliminating duplicate corporate procedures falls within the ambit of “international transaction” as defined in section 92B of the Income Tax Act.
Facts- The assessee is primarily engaged in diamond manufacturing/distribution. It is a wholly owned subsidiary of Dimexon (India) Holding Pvt. Ltd. (DIHPL), which in turn is wholly owned by Dimexon International Holdings B.V., Netherlands (DIHBV), the ultimate parent company of the Dimexon Group.
During the year under consideration, the assessee entered into a scheme of amalgamation with its holding company DIHPL. The scheme was sanctioned by NCLT. Pursuant to the sanction, the amalgamating company, i.e. DIHPL got merged into the assessee. For the said merger, the assessee paid a total purchase consideration of Rs. 188.35 crore to DIHBV (i.e. the holding company of DIHPL)
Pursuant thereto, the holding company of the assessee was changed from DIHPL to DIHBV in view of the cancellation of existing shares of the assessee held by DIHPL and the issuance of new shares to DIHBV. Since the book value of DIHPL as on 31/03/2016 was Rs. 369,28,18,214 and pursuant to the merger, the total purchase consideration of only Rs. 188.35 crore was paid to DIHBV in the form of equity shares, Compulsory Convertible Debentures (”CCDs”), and cash,
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