| Case ID |
05e3339b-4d49-4db1-81d0-d117decad358 |
| Body |
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| Case Number |
A.A.R. No. 779 OF 2008 |
| Decision Date |
Apr 23, 2009 |
| Hearing Date |
|
| Decision |
The Authority for Advance Rulings ruled that the proposed partnership firm to be formed by Canoro Resources Ltd. with Legasi Petroleum International Inc. can be assessed as a firm under the Income-tax Act, 1961, provided the requirements of section 184 are complied with. The firm will be liable to tax at the rate of 30 percent plus applicable surcharge and cess. The residential status of the partnership firm is a question of fact to be determined by the Assessing Officer at the relevant time. If assessed as a firm, the share of the partners in the total income of the firm shall not be included in the total income of such partners. The proposed transfer of the participating interest of the applicant in the Amguri block to the partnership firm is regarded as an international transaction between two associated enterprises, and the resulting capital gains can be assessed according to the transfer pricing provisions contained in Chapter X of the Act. The provisions of article 24 of the DTAA do not apply in this case. |
| Summary |
In this case, Canoro Resources Ltd., a Canadian company engaged in petroleum exploration and production, sought an advance ruling regarding the restructuring of its business in India. The company intended to transfer its participating interest in the Amguri block to a partnership firm formed in Canada with its wholly owned subsidiary. The ruling addressed whether the partnership could be assessed as a firm under the Income-tax Act, compliance with section 184, and implications for capital gains tax. The Authority concluded that the partnership could be assessed as a firm if it met the necessary requirements, and the taxation rate would be 30%. Furthermore, the ruling clarified that the transfer would be considered an international transaction, subject to transfer pricing regulations. This case highlights the complexities of international tax law and the importance of compliance with local regulations for foreign entities operating in India. |
| Court |
Authority for Advance Rulings
|
| Entities Involved |
Legasi Petroleum International Inc.,
Canoro Resources Ltd.
|
| Judges |
P.V. Reddi,
A. Sinha,
Rao Ranvijay Singh
|
| Lawyers |
Dr. (Ms.) Anita Sumanth,
Amit Nayyar,
Sanjeev Sharma
|
| Petitioners |
Canoro Resources Ltd.
|
| Respondents |
Not available
|
| Citations |
2009 SLD 2565,
(2009) 314 ITR 2
|
| Other Citations |
Advance Ruling No. P-9 of 1995,
Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706,
Kylasa Sarabhaiah v. CIT [1965] 56 ITR 219,
N.T. Patel and Co. v. CIT [1961] 42 ITR 224,
Parekh Wadilal Jivanbhai v. CIT [1967] 63 ITR 485,
Addl. CIT v. Progressive Financiers [1979] 118 ITR 18,
B.R. Naik v. CIT [1945] 13 ITR 124,
Erin Estate v. CIT [1958] 34 ITR 1
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
245R,
184,
92,
45
|