TaxTMI 
TaxTMI 
2014 (5) TMI 316
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....95(2) of the Income Tax Act, 1961 (for short "the Act"), whereas, the assessee has preferred the appeal challenging the impugned final assessment order dated 25th August 2010, passed in pursuance of the direction given by the DRP, under section 144C(5) for the quantum of assessment passed under section 143(3). Since grounds raised by Assessee as well as the Revenue are common, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. We first proceed to decide the Revenue's appeal in ITA no.5086/Mum./2009, for the assessment year 2006-07. Ground raised by the Revenue, read as follows:- "1. On the facts and in the circumstances of the case and in law the learned ....
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....2.5% surcharge + 2% education cess. 3. Before the learned Commissioner (Appeals), detail submissions were made. Reliance was also placed on various decisions which has been noted by the learned Commissioner (Appeals) in Para-1.2 and 1.3 in his order. The learned Commissioner (Appeals) duly appreciated the assessee's submission and directed the Assessing Officer to charge @ 10.455% which is exclusive of income tax, surcharge and education ncess. The relevant observations and findings of the learned Commissioner (Appeals) are as under:- "I have considered the facts and submissions of the Ld.A.R. It is seen that the applicant M/s.Abbott Equity Holdings Ltd. is foreign company and it has purchased 11,66,184 shares of Abbott India Ltd. an ....
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....ictional Tribunal in the case of Chicago Pneumatic Tool Company vs. DDIT(IT) reported in (2009)-TIOL-330-ITAT-Mum wherein after relying on the ruling in the case of Mc.Leod Russel Kolkata Ltd .(2008)215 CTR(AAR)230 and Alcan Inc. vs. DDIT(IT)(2007) 112 TTJ (Mum) 328, it was held that the benefit of proviso to section 112(1) of the Act could not be denied to non-resident foreign Cos even if they are entitled to another relief in terms of first proviso to section 48 of the Act. The protection in terms of first proviso to section 48 of the Act is made available to non-resident might be a justification to deny the benefit of indexation, but the same cannot be said for the application on lesser rate. The A.R. has also place reliance on Compagnie....
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....find that the issue of chargeability of rate of tax under the long term capital gain on a transfer of listed shares by non-resident has been decided in favour of the assessee after analyzing the provisions of section 48 and 112 in great detail. Their Lordships, after discussing the various provisions of section 48 and also section 112, have opined as under:- "In the case of a non-resident, under sub-clause (c) of section 112(1), income-tax is calculated on long-term capital gains at 20 per cent. The proviso to section 112(1), however, gives a beneficial option to taxpayers on transfer of long-term capital assets being listed securities, units or zero per cent. coupon bonds. They are liable to pay tax at 10 per cent. on the amount of capi....
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....tion of exchange rate fluctuation under the first proviso to section 48 would not be entitled to pay the lower rate of tax at 10 per cent. The Legislature in fact did not intend to deny the benefit. For a non-resident who has utilised or brought in foreign currency for purchase of shares or debentures in Indian rupee, inflation in India is immaterial and inconsequential. For him, the gain or loss is to be computed with reference to the foreign currency utilized for purchase and foreign currency available to him for repatriation after the sale. From the assessee's view point and objective, he is most concerned with exchange rate fluctuation and his true and actual gain should take into account the exchange rate fluctuation. The second....
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....ictive and will not necessarily apply in all cases covered by the first proviso to section 48. Secondly, the proviso to section 112(1) is not applicable to debentures. Nevertheless, the proviso to section 112(1) is applicable to units and zero coupon bonds, which are not covered by the first proviso to section 48 of the Act. The second proviso to section 48 is not applicable on transfer of a long-term capital asset being bond, debenture other than the capital index bond. Zero coupon bonds are, however, specifically made eligible for the benefit under the proviso to section 112(1). It is clear from this that the purpose and object behind the proviso to section 112(1) itself is somewhat debatable, except that the legislative intention was ....