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10 per cent tax on capital gains to Holdings Co on sale of shares AIT News Network The tax payable on a long-term capital gains arisen to Moron Holdings PLC on the sale of originally acquired shares of Moron Tea Company (India) Ltd. will be @ 10% in consonance with the proviso to section 112(1) of the Income Tax Act of India. Even in respect of sale consideration arising out of the bonus shares, the tax liability of the non-resident foreign company will be @ 10% only as per the proviso to section 112(1) of the Act. Applicant purchased 15,20,000 equity shares of Moron Tea Company (India) Ltd. from Moron Holdings PLC, U.K. a non-resident company as per the sale & purchase agreement (in short SPA) executed between the purchaser (the applicant) and seller(Moron Holdings PLC, U.K.) on 18th January, 2007, wherein the purchaser agreed to purchase the said shares of Moron Tea Company held by the seller @ RS.273 per share. Out of the said shares, the original 5,18,000 shares were acquired by the seller in lieu of all the assets of the Moron Tea Ltd. (a The applicant sought ruling from Authority on the following questions: "1. Whether on the stated facts and in law, the tax payable on long term capital again arisen to Moran Holdings PLC on sale of originally acquired shares of Moran Tea Company (India) Limited will be 10% of the amount of capital gain as per Proviso to Section 112(1) of the Income Tax Act, 1961? 2. Whether on the stated facts and in law, the tax payable on long term capital gain arisen to Moran Holdings PLC on sale of bonus shares of Moran Tea Company (India) Limited will be 10% of the amount of capital gain as per Proviso to Section 112(1) of the Income-tax Act? 3. Whether on the stated facts and in law, the long term capital gain arisen to Morgan Holdings PLC on sale of originally acquired shares and bonus shares of Moran Tea Company (India) Limited are to be computed by applying Section 48 of the Income-tax Act without having regard to either the first or the second proviso to the Section?" (Click here for full text of Ruling AIT-2008-79-AAR) Related News: · Authority rules on data recovered and re-imported in different media · Imports for Power Projects exempt from Additional duty: Advance Ruling · Salary paid by Infosys to non-resident employee taxable: AAR · 10 per cent tax on sale of original and bonus shares by Foreign Resident · Profit from Portfolio Investment not business income · Authority Settles Tax on Capital gains by Real Estate Developers · Profits of dealings with HO by MNCs branch taxable · Payment to Parent MNC for cost of seconded personnel subject to withholding tax · Payments at Singapore to access portal hosted from Singapore taxable in India · Withhold taxes whilst paying to Microsoft for software: Advance Ruling · Company’s Name cannot be substituted under Rule 20:Advance Ruling · Holding Shares as investment not stock-in-trade · No capital gains in assessee’s hand on sale of shares by lender: ITAT · Loss on sale of shares held as investment is “capital loss”: ITAT · Transfer of exchange card exigible to capital gains tax · Redemption of stock appreciation rights Amount is income: Special Bench · Admission fee & infra dev paid to exchange is Revenue Expenditure |
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