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Case Law Details

Case Name : Amiantit International Holding Ltd. (Authority for Advance Rulings)
Appeal Number : 2010-TIOL-07- ARA-IT
Date of Judgement/Order :
Related Assessment Year :
Courts : Advance Rulings
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Authority for Advance Rulings (AAR) [2010-TIOL-07- ARA-IT] in the case of Amiantit International Holding Ltd. (Applicant) on the issue of whether the transfer of shares held by the Applicant in an Indian company, to its Cyprus-based 100% subsidiary under a re-organization scheme, is taxable as per the provisions of the Indian Tax Law (ITL) held that the transfer of shares did not result in any consideration and, therefore, it could not be taxed as capital gains under the provisions of the ITL.

The AAR also held that even though the transfer was an international transaction between Associated Enterprises (AEs), as there was no income arising as per the charging provisions of the ITL, the transfer pricing (TP) provisions could not be applied to determine taxable gain based on arm’s length principles.

Background and facts of the case

  1. The Applicant, an investment company incorporated in Bahrain, had investments in Europe, Asia, North Africa and Latin America. The Applicant was wholly owned by South Arabian Amiantit Company (SAAC) which was a listed entity in Saudi Arabia. The Applicant held 70% equity shares in an Indian company which was engaged in the production of glass-reinforced polyester pipes, storage tanks etc. The Applicant also held 100% shares in another investment company incorporated in Cyprus (Cyprus subsidiary) which held shares of various group entities.
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