{"id":3403,"date":"2011-07-05T14:21:54","date_gmt":"2011-07-05T08:51:54","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=3403"},"modified":"2011-07-05T14:21:54","modified_gmt":"2011-07-05T08:51:54","slug":"richter-holding-ltd-vs-adit-it-karnataka-high-court-ao-to-decide-preliminary-issue-whether-sale-of-shares-of-foreign-co-by-non-resident-to-non-resident-attracts-indian-tax","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/richter-holding-ltd-vs-adit-it-karnataka-high-court-ao-to-decide-preliminary-issue-whether-sale-of-shares-of-foreign-co-by-non-resident-to-non-resident-attracts-indian-tax\/","title":{"rendered":"Richter Holding Ltd vs. ADIT (IT) (Karnataka High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (richter_sale_of_foreign_co_by_NR_to_NR.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nAO to decide “preliminary issue” whether sale of shares of Foreign Co by Non-Resident to Non-Resident attracts Indian tax
\n<\/strong><\/p>\n

The assessee, a company based in Cyprus<\/em>, bought shares (100% together with another company) of a UK company<\/em> called Finsider International, from another UK company<\/em>. Finsider, UK, held 51% shares of Sesa Goa Ltd<\/em>, India. The AO took the view that the 51% shares in Sesa Goa held by Finsider, UK, constituted a capital asset u\/s 2(14) and that the transfer of the shares of Finsider amounted to a transfer of the said 51% shares of Sesa Goa<\/em> and that the assessee was liable to deduct tax at source u\/s 195 when it bought the shares of Finsider, UK. He accordingly issued a show-cause notice u\/s 201 seeking to treat the assessee as a defaulter. The assessee filed a Writ Petition to challenge the notice on the ground that as one non-resident had sold shares of a foreign company to another non-resident, there was no liability under Indian law<\/em>. This was dismissed<\/strong> by the Single Judge (click here<\/a><\/strong>) by holding \u201cWhat is under challenge is only the show-cause notice issued u\/s 195 \u2026 it may be necessary for the fact finding authority to lift the corporate veil<\/strong> to look into the real nature of transaction to ascertain virtual facts<\/strong>. It is also to be ascertained whether the assessee, as a majority shareholder<\/strong>, enjoys the power by way of interest and capital gains in the assets of Sesa Goa<\/strong> and whether transfer of shares in the case on hand includes indirect transfer of assets and interest in Sesa Goa<\/strong><\/em>\u201d. The assessee filed an appeal against the said judgement. HELD, while declining to interfere with the judgement:<\/p>\n

While the order passed by the Single Judge is justified and the show-cause notice does not call for interference, in view of the judgement of the Supreme Court in Vodafone International vs. UOI<\/a><\/strong> 221 CTR 617, the interest of the assessee is safeguarded by directing that the AO shall record a finding on the preliminary issue relating to jurisdictional fact<\/em><\/strong> (as to whether the overseas transaction attracts Indian tax at all<\/em>). If the assessee is aggrieved by the finding, it is entitled to challenge the same by a Writ Petition.\n<\/p><\/blockquote>\n

\nSee also Vodafone International Holdings B.V. vs. UOI<\/a><\/strong> 329 ITR 126 (Bom) on the same point\n<\/div>\n","protected":false},"excerpt":{"rendered":"

While the order passed by the Single Judge is justified and the show-cause notice does not call for interference, in view of the judgement of the Supreme Court in Vodafone International vs. UOI<\/a><\/strong> 221 CTR 617, the interest of the assessee is safeguarded by directing that the AO shall record a finding on the preliminary issue relating to jurisdictional fact<\/em><\/strong> (as to whether the overseas transaction attracts Indian tax at all<\/em>). If the assessee is aggrieved by the finding, it is entitled to challenge the same by a Writ Petition<\/p>\n

Read more ›<\/a><\/div>\n

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