Acciona Wind Energy Private Limited Vs DCIT (International Taxation) (ITAT Bangalore)
Section 47(iv) Exemption Denied Since Parent Company Did Not Hold Entire Share Capital: ITAT; ITAT Bangalore Holds Buyback of Shares Covered by Section 46A, Not Section 45; Buyback Transaction Taxable as Deemed Capital Gains Due to Inapplicability of Section 47(iv); ITAT Rejects Claim That Minimum Two Shareholders Requirement Grants Section 47(iv) Relief; Capital Gains on Buyback Taxable Even Without Transfer Requirement Under Section 46A: ITAT; Interest Under Section 201(1A) Mandatory, Rules ITAT Bangalore While Dismissing Appeals; ITAT Bangalore Distinguishes Papilion Investments Case While Denying Section 47(iv) Benefit
In these appeals, the assessee challenged two separate orders passed by the Commissioner of Income Tax (Appeals)-12, Bengaluru, both dated 08.03.2018, for Assessment Year 2014-15. One appeal arose from proceedings under Section 201(1) of the Income Tax Act, 1961, and the other from proceedings under Section 201(1A).
The principal dispute in the first appeal concerned the taxability of gains arising from buyback of shares and the applicability of Sections 46A and 47(iv) of the Act. The assessee contended that the buyback transaction was covered under Section 47(iv), which exempts certain transfers between a holding company and its subsidiary from capital gains taxation. The assessee argued that Section 46A was not a charging provision and that Section 45 was the charging section for capital gains. It was also argued that the entire shareholding requirement under Section 47(iv) should be interpreted pragmatically because Indian company law requires a minimum of two shareholders.
