| Case ID |
08928566-136b-4f5c-9cea-3479409b3a20 |
| Body |
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| Case Number |
Application No. 846 of 2009 and Application No. 84 |
| Decision Date |
Jan 01, 2012 |
| Hearing Date |
Nov 20, 2009 |
| Decision |
The ruling concluded that the transactions of sale of shares by the applicants in ShanH to Sanofi are taxable in India in terms of paragraph 5 of Article 14 of the Double Taxation Avoidance Convention between India and France. The essence of the transaction involved the underlying assets and controlling interest in the Indian company, Shantha, which was deemed taxable in India despite the shares being held in a French entity. The ruling emphasized that the structure of the transaction appeared to be a scheme designed to avoid tax liabilities in India, which could not be accepted at face value. Therefore, the authority ruled that the capital gains arising from the sale should be taxed in India, reinforcing the principles of taxation regarding the underlying assets and the controlling interest in a company. |
| Summary |
This case involved an advance ruling request regarding the tax implications of a share sale transaction between two French companies, MA and GIMD, concerning their subsidiary ShanH, which held shares in an Indian company, Shantha. The applicants sought clarity on whether capital gains from the sale of shares in ShanH to Sanofi would be taxed in France or India. The authority determined that the underlying assets and control of Shantha, an Indian company, were effectively being transferred, bringing the transaction within the scope of Indian taxation laws. The ruling highlighted the importance of assessing the substance over the form in tax matters and reaffirmed the principles of the DTAA between India and France, ruling that the capital gains were taxable in India. This case underscores critical aspects of international taxation, corporate structuring, and anti-avoidance regulations, particularly in cross-border transactions. |
| Court |
Authority for Advance Rulings, New Delhi
|
| Entities Involved |
Groupe Industrial Marcel Dassault,
ShanH,
Shantha,
Sanofi
|
| Judges |
JUSTICE P.K. BALASUBRAMANYAN,
V.K. SHRIDHAR
|
| Lawyers |
Porus Kaka,
Manish Kanth,
B.M. Singh,
Dominique Tazikawa,
Rohan Shaz,
Rohit Jain,
Parth,
Kumar Visalaksh,
Girish Dave,
Gangadhar Panda
|
| Petitioners |
Groupe Industrial Marcel Dassault (MA),
Groupe Industrial Marcel Dassault (GIMD)
|
| Respondents |
Sanofi
|
| Citations |
2012 SLD 3138 = (2012) 340 ITR 353
|
| Other Citations |
McDowell and Co. Ltd. v. CTO [1985] 154 ITR 148 (SC),
Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706/132 Taxman 373 (SC),
Transmision Corpn. of A.P. Ltd. v. CIT [1999] 239 ITR 587/105 Taxman 742 (SC),
GE India Technology Cen. (P.) Ltd. v. CIT [2010] 327 ITR 456/193 Taxman 234 (SC),
Canoro Resources Ltd., In re [2009] 313 ITR 2/180 Taxman 220 (AAR-New Delhi),
ABC International Inc. USA, In re [2011] 199 Taxman 211/11 taxmann.com 146 (AAR-New Delhi),
IRC v. Duke of Westminister [1936] AC 1,
IRC v. Burmah Oil Co. Ltd. [1982] STC 30 (HL),
Furniss v. Dawson [1984] AC 474,
Ensign Tankers (Leasing) Ltd. v. Stokes (Inspector of Taxes) [1992] 2 WLR 469 (HL),
Moodie v. IRC [1993] 1 WLR 266 (HL),
Craven v. White [1988] 3 WLR 423 (HL),
HMRC v. Tower MCashback LLC [2011] UK 19 (SC),
Macniven v. Westmoreland Investments [2001] UKHL 6,
W.T. Ramsay Ltd. v. IRC [1981] 1 AIIER 865,
Norglen Ltd. v. Reeds Rains Prudential Ltd. [1999] 2 AC 1
|
| Laws Involved |
Income-tax Act, 1961,
Double Taxation Avoidance Agreement (DTAA) between India and France
|
| Sections |
9,
245Q
|