Himachal Government hikes VAT from 4 per cent to 5 per cent on all items, except edible oils and foodgrains Authority for Advance Ruling rules no capital gains accrued or arose at the time of conversion of partnership firm into a private limited company under Part IX of the Companies Act and therefore, notwithstanding the non-compliance with clause (d) of proviso to Section 47(xiii) of the Income Tax Act, by reason of premature transfer of shares, the said company is not liable to pay capital gains tax-AIT-2010-93-AAR Authority for Advance Ruling rules if the purchasers are non-residents other than the applicant, the applicant is liable to pay tax in India on the amount received by it for the support services rendered through the branch office in India-AIT-2010-92 -AAR Jurisdiction of Dispute Resolution Panel-Income Tax Order No.3 Employment of washing process in the manufacture of agglomerates etc from imported plastic waste and scrap-SEZ Instruction No.48 Haryana Government imposes surcharge ranging from 0.25 per cent to 0.7 per cent on VAT Service Tax Notification No. 17/2010 which exempts the taxable service providing packaged or canned software, intended for single use and packed accordingly amended-Service Tax Notification No.18 Procurement, Import and Export of Prohibited and Restricted Goods by SEZ Units-SEZ Instruction No. 47 Tractors are chargeable to tractor cess in terms of the Tractor Cess Rules, 1992 read with the IDRA Act, 1951-Central Excise Circular No. 916 Authority for Advance Ruling rules the amounts received/receivable by Technopromexport from NTPC under contract for Offshore supply of all plant and equipment including mandatory spares are not liable to tax in India under the provisions of the Income-tax Act, 1961 and DTAA between India and Russia-AIT-2010-79-AAR whether Cess levied under section 5 of Textile Committees Act, 1963 is includable as a component of CVD-AIT-2010-78-HC Toilet linen and kitchen linen, of terry toweling or similar terry fabric, of cotton and of other textile materials added in Focus Product Scheme for exports made after 1st Jan 2010-DGFT PN 46 TDS on payment of interest on time deposits under Section 194A of the Income Tax Act by banks following Core-Branch Banking Solutions software-Income Tax Circular No.3 Duty Credit Scrips can also be used / debited towards payment of Customs Duties in case of EO defaults under Authorizations issued under Chapters 4 and 5 of the Policy-DGFT Notification No.32 SC Ruling-the nature of roll over premium charge incurred by the assessee as also the scope and applicability of Section 43A of the Income Tax Act, 1961, in the context of such charges-we find no merit in the contention of the assessee that roll over charges have nothing to do with the fluctuation in the rate of exchange-AIT-2010-75-SC Pre-authentication of excise invoices dispensed with Excise duty on Goggles and OTS cans hiked to 10 per cent av gas and mosquito net impregnated with insecticides subjected to 4 per cent excise Outright exemption from additional duty of customs (of 4%) leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975 to goods imported in a pre-packaged form and intended for retail sale Benefit of allowing Cenvat credit to be reversed on proportionate basis (when common inputs are used for the manufacture of dutiable and exempt products) extended retrospectively Bad News for ladies-sanitary napkins & kids diapers subjected to 10 per cent excise excise duty @ 4% imposed on specified IT products like microprocessor other than motherboards, floppy disc drives, CD-Rom drive etc when these items are meant for external use with a computer or laptop as a plug-in device Packaged software or canned software exempted from excise excise duty on Cartons, boxes and cases, of corrugated paper or paperboard manufactured by Standalone manufacturers lowered from 8% to 4%

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NEW DELHI. Giving mega relief to MNC subsidiaries vide a significant ruling AIT-2007-70-AARAuthority for Advance Rulings (Income-Tax) has ruled that amalgamation of the wholly owned subsidiary foreign company with its parent company does not result in a transfer for consideration and therefore, does not given rise to any capital gains. The liability to capital gains tax (if any) can only be on the transferor company (subsidiary), which in the present case has lost its identity and ceased to exist.

T H E F A C T S:

The applicant, Hoechst GmBH, Germany, was a company incorporated in Germany. Aventis Pharma Holding GmbH (APH) which got amalgamated with the applicant, effective on and from 30.09.2005, was a hundred per cent subsidiary of the applicant. By virtue of the amalgamation, all the assets and liabilities of APH became the assets and liabilities of the applicant. APH held 11,538,342 shares of Aventis Pharma Ltd. (APL) an Indian company listed on Mumbai Stock Exchange. As a result of amalgamation, the shares of APL held by APH vested in the applicant and since the applicant was the only shareholder of APH, no share was issued to any third party consequent to the amalgamation. It was stated that by virtue of section 11 of the German Reorganization Tax Act, the amalgamation will not attract capital gains tax in Germany. On the basis of these facts advance ruling is sought on the following questions:

“1.Whether any capital gains chargeable under section 45 of the Income-tax Act arose to Aventis Pharma Holding GmbH on its amalgamation with Hoechst GmbH in respect of the shares of Aventis Pharma Limited, India held by Aventis Pharma Holding GmbH?

2.If the answer to question 1 is in the affirmative, whether the vesting of shares of Aventis Pharma Limited, India held by Aventis Pharma Holding GmbH in Hoechst GmbH pursuant to the scheme of amalgamation is exempt from capital gains tax under section 47(via) of the Income-tax Act?

3.If the answer to question 1 is in the affirmative and to question 2 in the negative, whether the tax rate of 10 per cent can be applied to the capital gains under the proviso to section 112(1) of the Income-tax Act if the tax so computed is lower than the tax at the rate of 20 per cent computed as per section 112(1) (c) of the Act?”

T H E R U L I N G:

Question no. 1: No capital gains chargeable under section 45 of the Income-tax Act arose to Aventis Pharma Holding GmbH on its amalgamation with Hoechst GmbH in respect of the shares of Aventis Pharma Limited, India held by Aventis Pharma Holding GmbH;

Question no. 2: This is consequential to the ruling on the first question. In view of the said ruling, this question does not survive.

Question no. 3: It is consequential and does not require a ruling.

( Click here for full text of Ruling AIT-2007-70-AAR)