TaxTMI 
TaxTMI 
2011 (2) TMI 1436
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....ITA No.771/Kol/2010 [by the revenue] is taken up first. ITA No. 771/Kol/2010 AY 2006-07 [by the revenue] 3. Initially the revenue had taken following three ground of appeal:- 1. That the Ld. CIT(A) erred on facts and in law, that Controlling interest has a separate existence from the shares and is separately tradable. 2. That the 1.4. CIT(A) erred in holding that for the purposes of capital gains only the portion of Rs. 74.20 should be considered as sale value and the balance was non taxable ignoring the judgment of Madras High Court in the case of Venkatesh Minor vs CIT 243 ITR 367 where the facts were absolutely identical. 3. That the Ld. CIT(A) was not justified in upholding the contention of the assessee that consideration amounting to Rs. 4,69,50,288/- was received for parting with Controlling interest and thus was not taxable. 4. However, subsequently vide AO's letter dated 24th May, 2010 following seven grounds have been taken by the revenue. 1. That the ld. CIT(A) erred on facts and in law, that Controlling interest has a separate existence from the shares and is separately tradable. 2. That the Ld. CIT(A) erred in h....
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....e contention the valuation report prepared by Deloitte Haskins and Sells was also submitted. It was contended by the assessee that only Rs. 74.20 could be taken as sale consideration received for transfer of shares and the balance amount of Rs. 30.80 could not be taxed as the same was on account of transfer of capital asset which had no cost of acquisition. Reliance was placed on the following:- CIT vs. B.C Srinivas Shetty 128 ITR 294 (SC) 5.1 The AO held that managerial control is not a separately tradable entity. It forms an inalienable part of the whole share. Share and managerial control could not be traded separately. Reliance was placed by him on the following cases:- a. Maharani Ushadevi vs. CIT 131 ITR 445(MP) b. Venkatesh (Minor) vs. CIT 243 ITR 367(Mad) c. C.R Rajendra vs. CIT 125 Taxman 55 d. CIT vs. Mahadeo Ram Kumar 166 ITR 477(Cal) 5.2 The AO in terms of section 48 of the Act took the full value of consideration for transfer of impugned shares at Rs. 105/- per share and calculated the short term capital gain at Rs. 5,33,52,600/- and long term capital gain at Rs. 10,40,35,050/-. 6. Aggrieved the assessee filed appea....
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....aforesaid by way of acting in concert with other members of the Promoter Group in relation to the Group shareholding as a whole and controlling the affairs of the said company. Hence control ling interest rights were always held, enjoyed and exercised by the promoter Group. All the various holders of the 24% of the promoter's shares all along acted in concert. (3) Immediately prior to 28th January 2006 and 30th January 2006 the dates involved in the issues involved herein negotiations took place between the Promoter Group namely, Neotias and Sekhsari as on the on hand and Holcim Group, a Swiss Group, on the other hand, for takeover of the Promoter Group share holding and acquisition of the control and affairs of the said company. This understanding was given formal shape and put down in writing and implemented by two different Agreements namely: (i) Share Purchase Agreement dated 28th January 2006 between the Promoter Share Holders and Holcim Group for sale and transfer on the said date 14.8%of the shares of the company namely, 200000000 Equity Shares of the company by the promoters to Holcim Group at a price of Rs. 105.00 per share. (ii) Having regar....
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....equired. (5) The Companies Act 1956 u/s 255 states ' that Directors are to be appointed by the Company in the General Meeting. It does not in any other manner deal with the quest ion of control of a company by the share-holders. (6) Therefore the Companies Act, itself has been deficient in relation to the matter of control of a Company. Control of a company therefore more or less had always been a quest ion of the fact of control than de-jure control. In fact and in law it has not been the requirement in the matter of 'management and control of the affairs of a company, particularly a Public Limited Company, that the persons in control thereof must own or hold individually or as a block majority shares or more than 50% shares of the company. There has been as in the instant case and in various other cases of leading Public Companies that the persons in control of affairs of the company and/or promoters held less than 51% shares but have been in control or held the control ling interest and are enjoying controlling interest of the company. It is also a fact, which is easily demonstrated from public information, that in cases of most of the prominent public ....
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....tors, Mr. Vinod Kumar Neotia, Mr. Pulkit Sejsharia and Mr.Harshvardhan Neotia 97-100 3. Copy of letter dated 30.01.2006 informing the Stock Exchanges about the purchase of shares from the promoters by Holderind Investment Ltd and also about the resignations of the promoter Directors 101-102 4. Copy of letter of offer issued by Holderind Investments Ltd in connection with the proposal to acquire further 20% of the equity in the company as per SEBI (Takeover Regulations) 1997 123-162 5. Copy of first quarter interim report for the year 2006 by Holeim Ltd informing in shareholders that they have management control of Gujarat Ambuja Cements Ltd. 168-189 (8) The public offer was duly made and completed where Holcim was able to acquire additional shares of the company in the open offer. Having regard to the aforesaid facts, the relevant Stock Exchanges SEBI and FIPB sanctioned the aforesaid transaction between the Promoter and Holcim and allowed Holcim to takeover the control and management of the company. (9) The aforesaid facts are duly noted in Holcim's report for the 1st quarter of 2006 at PB-1(186) which reads as follows:....
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....action. In support of such apportionment the assessee relied upon Valuation Report of M/s. Deloitte Haskins and Sells dated 28th July 2006 whereby the valuer determined the value of non controlling value of shares at Rs. 74.20 per equity share only (Paper Book I - Page 121). The value of controlling interest transferred therefore amounted to Rs. 30.80 per share. The per share value is merely a method of calculation and is not a value of the share so far as the value of control ling interest is concerned. It is the contention of the assessee that the value of controlling interest namely Rs. 30.80 per share is not taxable as it had and has no cost of acquisition and as per well settled principles of law under the Income Tax Act, 1961. Issue: The question for decision before the Hon'ble Commissioner of Income Tax (Appeals) therefore are: (1) Whether the transaction in question involved in addition to and apart from the transfer of shares a transaction of transfer of controlling interest by the assessee namely the promoter group to Holcim and there was transfer of control of the company. (2) If the answer to the first is in the affirmative, on th....
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....ttached to the block of the shares and can not form a separate asset by itself" Section 48 which prescribes the method of computing capital gains states that "the income chargeable under the head capital gains shall be computed by deducting from the full value of consideration received or accruing as a result of the transfer of the capital asset...:.". There is only one material asset, and that is the shares of GACL, this asset may contain within it many subsidiary rights, profits and privileges which would follow to the buyer as an inseparable content along with the transfer of the material asset. Whatever consideration is received or accrues, is by virtue of the transfer of shares and not by differentiated subsidiary rights which are neither fungible nor separately tradable. Thus it is abundantly clear that the action of the assessee of artificially splitting the value of consideration received i not tenable or logical grounds and also in the light of the judgments quoted above, and the whole exercise has been undertaken with sheer motive to evade taxes on the ensuing capital gains. Hence the whole amount of consideration received is being considered for the pur....
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....ec. 255 of the Companies Act only says that the Directors are to be elected in the General Meeting. Control of any organization or a control of affairs of any organization is basically a defacto issue. It is not always and as an essential condition necessary and it is not a pre-condition that those who have control of affairs of an organization or the person having controlling interest or desire to acquire control must have a de-jure authority for the same. Over the history as shown in relation to the affairs of a company that persons have acquired first de-facto control and acquire de-jure either not at all or later. It is not to say and it is not being suggested that dejure control is not a fact but what is being emphasized is that shares based control is not a condition precedent or an essential condition to acquire or retain control of an organization. A promoter of a company or a person or a group who establishes business organization or any other organizations may continue to be in control of the affairs of the company or organization without having majority or near majority holding in the share capital of the company, as normally has been the fact, as in the case of the inst....
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.... obtain control of a company may go about it- "Anyone wishing to obtain control of a company may go about it in one of four main ways: (i) he may buy the company's undertaking, (ii) he may make a general offer to the shareholders to purchase their shares or sufficient of them to give control, (iii) he may do a deal with the existing board whereby they sell their shares to him and resign their offices, filling the casual vacancies, thus created, by his nominees or (iv) he may seek to acquires, by purchase on the stock exchange or otherwise, sufficient shares to enable him to wage a successful battle of proxies with the existing management so that they are dismissed and replaced by his nominees. In all except the fourth case it will be necessary, or atleast desirable, to have the concurrence of the existing directors. If they receive some special benefits in return for their support will this be a secret profit for which they must account?" From the aforesaid observations of Gower it is clear that in order to takeover control of a company acquisition of any requisite number of shares is not an essential condition. Control, necessarily do not follow acquisition o....
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....ires a person acquiring more than 15% to less than 55% of shares or voting right to make public offer, it he intends to acquire such shares. The most significant part of the SEBI Regulation for our purpose is Regulation -12, which reads as follows: Acquisition of control over a company "12. Irrespective of whether or not, there has been any acquisition of shares or voting right in a company, no acquirer shall acquire control over the target company unless such person makes a public announcement to acquire shares and acquire such shares in accordance with the Regulations." Explanation to Regulation - 12 states that for the purpose of this regulation, acquisition shall include direct or indirect acquisition of control of a target company by virtue of acquisition of companies whether listed or unlisted, whether in India or abroad. "Control" is defined in Regulation 2(c) - to include - "control" shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or m....
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....nbsp; (b) Central Government/State Governments (c) Bodies Corporate (d) Financial Institutions/Banks (e) Any Others (Specify) Sub Total (A) (1) 2. Foreign a. Individuals (Non-Residents individuals/Foreign Individuals b. Bodies Corporate c. Institutions d. Any Others (specify) Sub Total (A) (2) Total Shareholding of Promoter and Promoter Group (A)=(A)(1)+(A)(2) (B) Public shareholding 1. Institutions (a) Mutual Funds/UTI (b) Financial Institutions/Banks (c) Central Government/ State Government(s) (d) Venture Capital Funds (e) Insurance Companies (f) Foreign Institutional Investors (g) Foreign Venture Capital Investors (h) Any Other (specify) Sub-Total (B)(1) B-2 Non-Institutions (a) Bodies Corporate (b) Individuals I Individuals-I.individual....
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....f the DR Holder Type of outstanding DR(ADRs, GDRs, SDRs, etc) Number of share underlying outstanding DRs Shares underlying outstanding DRs as a percentage of total number of shares (i.e Grand Total (A)+(B)+(C) indicate in Statement at para(1)(a) Above 1 2 Total (C) Information to and permission of FIPB is also required in relation to acquisition of shares (so far as in the case of a foreign acquirer), under Regulation 10B Notification No. FEMA-20/200-RB dated 03.05.2000. The above development of law relating to companies is not only restricted to India but almost in all countries where similar company jurisprudence is existing. (D) The three decisions herein before mentioned relied by the Assessing Officer were rendered in circumstances when the aforesaid requirement of law relating to change in control of the affairs of the company was not there and they do not deal with or lay down any principle or the principle laid down therein is not concerned with a situation arising out of circumstances relating to acqu....
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....n any manner the affairs of a company and has no controlling interest whatsoever. A block of shares as such or similar shareholders acting in concert controlling a block of shares, even less than major shareholders, may be in control of the affairs of a company and enjoy controlling interest. Those shareholders, who do not form part of the controlling group, do not in any manner whatsoever, either in fact or in law, have and enjoy any part of participation in the question of controlling interest. As has been demonstrated herein above, that in several well established public limited companies other group or persons holding substantial shares have no controlling interest whatsoever. Hence the theory or principle laid down in the aforesaid three decisions is not based either on facts and is not supported by law. (G) Various judicial decisions point out to the facts that control ling interest value could be considered separately and distinctly. The House of Lords in Gold Coast Selection Trust Ltd. vs. Humphrey [17 ITR (Supl) page 19 at Page 26] observed "if the asset takes the form of fully paid shares, the valuation will take into account not only the terms of agreem....
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....be that the value proper to be attributed to his holding under the regulation was greater than the sum of values that would be attributed to the shares comprised in that holding if they were split between various persons. The reason is that he has something to sell - control - which the others considered separately have not" His Lordship clearly recognized in fact and in law that one shareholder may sell the control which the other shares may not be able to do so. Therefore control is a quality or a commodity or an asset or a right which can be transacted separately from the shares. This is recognized by the aforesaid decision of the House of Lord. But on the facts of that case the said principle was not applicable. But the importance and relevance of the said principle in our case, is not by that reason, in any way diminished. The principle laid down therein by the House of Lord clearly demolishes the principle sought to be propounded by the Assessing Officer. This has been recognized by the authorities on Company Law. Grower in his aforesaid commentary at page-346 refers to [Dean vs. Prince (1953) Chancery 590] a decision of Justice Herman where the court recogn....
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....to deduct tax thereon u/s 195 read with Sec. 9 of the Income Tax Act 1961. This initiation of proceeding by the Department against Vodafone was disputed by the company as without jurisdiction before the Bombay High Court. The Bombay High Court decision is 311 ITR 46 = 1975 Taxman 399. Vodafone International before the Court contended and relied on the principle laid down in the three decisions relied by the- Department in the instant case - para 53-54. The Bombay High Court was not impressed by the aforesaid decision and the principle laid down therein. The Bombay High Court accepted on the other hand, the contention of the Income Tax department as noted in Para 92(f), 94 and 102 that shares in themselves may be an asset but in some case like the present one, shares may be merely a mode or vehicle to transfer some other assets. Mr. Parasaran for the Department pointed out that the very purpose of entering into agreement between the two foreigners was to acquire the controlling interest which one foreign company held in the Indian Company and therefore, the transfer was subject to Indian Income Tax Act. The Department relied upon the disclosure made and permission obtained ....
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....ect of shares held by it. The assessee company contended that the amount received should be apportioned between price of shares and as consideration for resignation of the directors etc. Page 591 - The court noted that the conduct of the appellant assessee in disposing shares of Elphinstone Mills was not consistent with the story that the appellant was acquiring shares for supporting the managing agent. Page 592 - The court did not accept the contention that the price paid by Jalan over and above the market price of the shares was paid for controlling interest so far as the appellant assessee was concerned. What is significant for the present purpose here is that the Court recognizes that it may be that in the total disposal of that entire block of shares in favour of J D Jalan the later may acquired certain amount of controlling power apart from mere acquisition of shares. It was also conceivable that Mulraj Karsondas in going through the transaction that Mulkraj might give K D Jalan not only the shares but certain other advantages. But the question should be examined from the point of view of the appellant and what we have to see is what the appellant parted wit....
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....ether the assessee in acquiring those shares only acquired a stock in trade or also acquired a capital asset of an enduring nature? Page 799 - The facts found clearly showed that this was not a mere purchase of shares as shares; buying a big block at a higher price. The seller owned not only shares but the managing agency as well and it was clear that the seller would not sell the shares without charging for the managing agency. The price agreed was out of proportion with the market price which indicated that the acquisition was something more than mere shares. Page 800 - Controlling interest was acquired by the Bhalla Group for the benefit of the assessee and it was an acquisition of interest of an enduring nature. Therefore the transaction was of capital nature. This decision clearly establishes that controlling interest is an acquirable interest of an enduring nature and cannot be looked as a mere appendix to acquisition of shares. (iv) The aforesaid views further finds support from the decision of the Patna High Court in the case of Raghuvir Narayan Sing reported in 147 ITR 447. The court negatived the content ion of the department that the entire con....
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.... only as such but it was a transaction of transfer both of shares and controlling interest in fact and in law. Therefore the consideration received, composite consideration, was for the transfer of two distinct interests and rights. In the premises it is respect fully submitted that having regard to the established principles of apportionment the consideration received should be apportioned between shares and controlling interest. The appellants before the Assessing Officer relied upon, on in this regard, the valuation where the controlling interests have been valued at Rs. 30.80 per share and the share value has been estimated at Rs. 74.20 per share. The Assessing Officer has not disputed the legality and validity of the said apportionment and valuation. Established principles of apportionment: The Supreme Court in CIT -vs-. Best and Co. Pvt. Ltd, 60- ITR-11 at page 23 held "If the compensation paid was in respect of two distinct matters one taking the character of capital recent and the other of a revenue receipt, we do not see any principle which prevents the apportionment of the income between the two matters. The difficulty in apportionment cannot be....
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....said agreement, it is mentioned that- "Holcim Mauritius desired to purchase the Sale Shares from the Sellers, and the Sellers desire to sell and transfer the Sale Shares to Holcim Mauritius on the terms and subject to the conditions more specifically set forth in this Agreement." The very wordings in fact clarify that the primary objective of the agreement is sale of shares only. The covenant 'subject to conditions', mentioned above is a general covenant and in no way impedes upon the obvious inference that the material transactions is the transactions of shares only. 2. Exhibit two is the share holders agreement dated 30.01.2006 between the promoters of Gujarat Ambuja Cements Limited and Holderind Investments Limited, Mauritius. Under Clause-D of the said agreement on Page No.45, it is mentioned that the 'Holcim Mauritius being desirous of acquiring control of GACL pursuant to this Agreement is making an open offer (the GACL Open Offer) under and in accordance with the Regulations 12 read with 10 of the Securities Exchange Board of India. It would not be out of place to deduce from the said words that the open offer is being made to acquire t....
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.... no other way for the Suzuki to gain control over MUL but by increasing the threshold of its share holding. The moot point is that no alienation of shares and the control inherent in them is plausible. The two have to be traded together. 13. Exhibit thirteen is the copy of Patna High Court's decision in the case of Raghubar Narayan Singh's case. However, the decision has not attained finality in light of the fact that an SLP against the said decision was admitted before the Supreme Court. The present status of the said SLP is not known to the undersigned. Whereas the decision of Jurisdictional High Court in the case of CIT vs Mahadeo Ram Kumar, as reported in 166 ITR 477, the Ld. Members of the bench have observed that" it appears to us that the control ling interest attached to the said block of shares can not be considered separately from the shares themselves. Each share represents a vote in the management of the company Controlling interest is therefore inextricably attached to the block of the shares and can not form a separate asset by itself." This dictum, being of the jurisdictional High Court was binding on the assessee. Similar view has ....
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....operly. Holcim bought both control and shares from the Promoter Group. By this one can not jump to the conclusion that the two aye' not severable and control is a natural incident of shareholding and to get control buying shares is essential or the only recognized method, both in law and the commercial world. He missed the fact that acquisition of 14% share of prompters could not have given control to Holcim from the promoters. Holcim had to negotiate for control also with the promoters. Object and primary purpose of the transaction was to get control - shares - only worked as the facilitator or the catalytic agent. Control was with the promoters. Mere get ting shares of promoters, by itself, could not have given control to Holcim. Since Holcim got control open offer was required to be made, as per Regulation 12 of the SEB1 Takeover Code. He missed the fact that by getting 14% share Regulation 10 and 11 had not become applicable. It was a case of Regulation 12 of the SEBI Take Over Code. The two agreements and all subsequent steps taken in consequence thereof are not disjointed facts but have to be read together. There is a dovetailing about ....
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....transfers of shares only - object of the transaction was to get control for which the shares were only a medium a vehicle a vessel. Controlling interest was and is an asset a right situates in India and therefore the transaction was subjected to Indian Tax laws. That was and is the case of the Dept. in Vodafone case. In the premises it is submitted that the report of AO is no answer to the appellants' submissions." 10. The ld. CIT(A), in the above circumstances, held that even though the promoters group of M/s.GACL held about 24% of share before transferring the impugned shares to Holicim, the group had management control over GACL. Thus, it was concluded by him that the assessee himself being a part of that group, which held controlling interest over GACL, when the shares were transferred not only the shares but the controlling interest was also transferred. 11. The ld. CIT(A) analyzing the judgment of Hon'ble Bombay High Court in the case of Vodaphone International Holding B.V vs. U.O.I and Anr. 311 ITR 46 was of the opinion that Hon'ble Bombay High Court in the said judgment held that controlling interest was a separate asset, which was distinct from t....
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....t would, therefore, follow that shares were sold inclusive of inseparable controlling interest. III. Shareholder 's agreement dated 30-01-06 makes it abundantly clear that object of this agreement was to "Acquire Control of GACL". This would show that the purchase of the shares by Holicim was inclusive of Controlling interest, which are inseparable. IV. Shareholders' agreement dated 30-01-06, last page of which is available at page 94 of APB, is not signed by anybody. Thus, no notice of this agreement as an authentic document can be taken. V. The AO has relied on following case laws for the proposition that controlling interest is inseparable part of each share:- a. Maharani Ushadevi vs. CIT 131 ITR 445(MP) b. Venkatesh (Minor) vs. CIT 243 ITR 367(Mad) c. C.R Rajendra vs. CIT 125 Taxman 55 d. CIT vs. Mahadeo Ram Kumar 166 ITR 477(Cal) The ld. CIT(A) without distinguishing the above cases has relied on the decision of the Hon'ble Bombay High Court in the case of M/s. Vodaphone International Ltd. (supra) by observing as under:- "In any case, the judgment of Hon'ble Bombay High Court has b....
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.... same. IX. Non compete fee of Rs. 15 per share, which forms part of the full value of consideration of Rs. 105/- per share as per said agreement dated 28-01-06, is also taxable as per provision of section 28(va) inserted by the Finance Act'02 w.ef 01-04-2003. X. Without prejudice to the above, if it is held that controlling interest is a separate and distinct capital asset capable of being transferred independent of the shares, sale of such capital asset would be taxable u/s.55(2)(a). 17. It was, therefore, contended that the order of the AO be upheld. 18. The ld. AR for the assessee, on the other hand, has supported the order of the ld. CIT(A). The submissions made before him were reiterated. The submissions of the ld. AR for the assessee are summarized hereunder:- I. Neotia Group and Sekhsarias group were promoters of M/s. Gujrat Ambuja Cement Ltd (GACL) (hereinafter referred to as the Promoters Group). Promoters Group all along from the beginning were in control of it's management. The Chairman, the Managing Director and 3 Directors belonging to the Promoter Group were on the Board of Directors of the company. They were responsible for co....
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....ing interest could be transferred to the acquirer. As such this view is further supported by the Hon'ble Jurisdictional High Court's decision in the case of Hindustan Motors [AIR 1976(Cal) 450 dated 27-3-1973. Thus, a defacto control without having de-jure control by acquiring more than 50% voting rights in the company can also be termed as controlling interest and the same is capable of being transferred. Principles of Modern Company Law (3rd Edition by LCB Gower also states that "..........de-facto control over the Board can exist without any legal power at all. Thus, it is well-known with a large and dispersed membership of a comparable small proportion of the total shares, if held in one hand, may enable actual control to be exercised. V. The above view of the Hon'ble Calcutta High Court was not noted by the court in the subsequent decision in the case of Mahadeo Ram Kumar(supra). In the case of Mahadeo Ram Kumar (supra) the attention of the court was also drawn to the judgment of House of Lords in Short and another vs. Treasury Commissioners (1948) (Appeal cases 534). However, the High Court did not distinguish the same and held that controlling interest a....
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....4/- per share. In view of the above, the value of shares sans controlling interest determined by the valuers should be accepted. XI. Regarding the taxability of consideration received for transferring the capital asset being controlling interest, it was submitted that controlling interest admittedly is a capital asset in the hands of the assessee. Such capital asset does not have any cost of acquisition. Thus, in view of Hon'ble Supreme Court's decision in the case of B.C.Srinivasa Shetty(supra), the same cannot be brought to tax as capital gain. Section 55(2)(a) mentions specified capital asset, which could be brought to tax under the head capital gains, even though the cost of acquisition of such capital asset is unascertainable Controlling interest is not enumerated in section 55(2)(a). Thus, there is no application of the above section in the facts of the present case. Therefore, the amount received for transfer of controlling interest cannot be brought to tax. 19. It was, therefore, contended that the appeal of the revenue be dismissed. 20. The bench required the respondent assessee to furnish the following documents:- a. Evidence of Holicim com....
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.... power of attorney was required to be filed as per the bench's direction, the assessee has shown his inability to file the same. Thus, it is unclear as to what authority was parted by the assessee as per the said power of attorney. It is undisputed position in law that power of attorney holder can act on behalf of the person concerned, who gives such power to a person only to the extent enumerated in such power of attorney. It has not been shown by brining any evidence on record that Sh. Suresh Kumar Neotia, who was the chairman of M/s. GACL during the relevant period has given the authority to Mr. Sekhsaria to part with controlling interest over GACL, if any, held by him. In the above facts, we hold that Shri Sekhsaria could not have parted with controlling interest, if any held by the assessee in GACL. 22.3 We would like to state here that there is confusion on the issue as to what is meant by the term 'controlling interest'. The revenue understood the term to mean holding of more than 50% voting right in a company. The assessee, on the other hand, claims that same would mean actual control of the company held by an entity even though it held less than 50% of the v....
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.... in which the Sale Shares are held by, and the details of the Sale Consideration payable to each of RMIL and the Other Sellers are set out in Annex-2.2 hereto. The Sale Shares shall be sold and purchased for the Sale Consideration by way of a negotiated deal on a spot delivery basis in the manner set out in art.2.4 below." 22.9 'Completion' and 'closing' is enumerated in article 2.4 as under: "2.4.1:Date and Place The execution of this Agreement and the Closing of the sale and purchase of the Sale Shares (the Share Sale Closing) shall take place simultaneously on January 28,2005 (the Closing Date). The Share Sale Closing shall take place at the office of RMIL's solicitors in Mumbai, India or at such other place and time as may be earlier agreed in writing between the Parties. All transactions contemplated by this Agreement to be consummated at the Share Sale Closing are interrelated and are expressly to be so, and all transactions under taken by or pursuant to this Agreement shall be unwound. If not all such transactions are consummated in accordance with this Agreement." "2.4.2: Closing Actions At the Clo....
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....ctors or executive management assume a position as non-executive director, consultant, or adviser of a Restricted Business. It is understood and agreed that (i) none of the Other Sellers shall assume any executive directorship or employment position. In a Restricted Business and (ii) in addition to the foregoing those Other Sellers who are currently serving or have in the past been serving on the GACL board of directors or executive management shall not assume a position as non executive director, consultant or adviser of a Restricted Business. It is understood and agreed that nothing in this Article 5 shall restrict any of the Sellers from assuming any directorship(executive otherwise) or employment position in, or entering into any consultancy or advisory management with Ambuja Cement India Limited. The Associated Cement Companies Limited. Ambuja Cement Limited or any other entity in India controlled by Holcim Mauritius or its Affiliates. That Non Compete component shall be paid to the Sellers in the proportion set out in Annex 2.2 hereto, and shall be paid as set out in art .2.4.2 22.11 The name of the assessee figures at Sr. No.9 of Annexure-2.2 of the above agreeme....
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....ACL, copy of which has been furnished by the ld. AR for the assessee, Article 122 reads as under:- "122 (a) So long as GIIC continue to hold more than 10% in the equity share capital of the Company, GIIC shall be entitled to nominate upto 2 Directors whether rotating or non- rotating (hereinafter referred to as "GIIC Directors"). Provided, however, that in the event of GIIC reducing its equity shareholding to 10% or below 10% of the paid up equity share capital of the Company, then in such an event GTIC shall be entitled to nominate only one Director on the Board of the Company. NSS shall be entitled to nominate at least 4 Directors on the Board of the Company, whether rotating or non-rotating (hereinafter referred to as 'NSS Directors"). (b) Deleted. (c) GIIC's Directors shall always be appointed in consultation with Government of Gujarat. (Approved at the 5th Annual General Meeting held on 30.10.87).". 22.14 The above would show that NSS [Shri Narotam Satyanarayan Sekhsaria] is entitled to nominate at least 4 directors on the Board of Company. It has not been shown to us that the above articles of association has been modified in any....
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....a) 23. In the result, the appeal [ITA No. 771/Kol/2010 AY 2006-07] of the revenue is allowed. ITA Nos. 770, 772, 773 and 774/Kol/2010 AY 2006-07 [by the revenue] 24. ITA Nos. 770,772 and 773/Kol/2010 relate to company assessee. However, these companies are also not signatories to share purchase agreement dated 28-01-06. These companies also have not furnished the copies of the power of attorney given to N.S.S [Shri Narotam Satyanarayan Sekhsaria]. 24.1 ITA No. 774/Kol/2010 relates to an individual. She is also not a signatory to share purchase agreement dated 28-01-06. In her case also the copy of power of attorney given to N.S.S has not been furnished. 24.2 Nos. of share held in case of ITA Nos. 770, 772, 773, 774 and 775/Kol/2010 AY 2006-07 as under:- [Page Nos.28-29 of PB-1] S. No. Name of shareholders No. of GACL Share % of Equity D-mat a/c/Name of D. Participant Sale Consideration Non-compete Component (Rs.15/- shar) Total Sale consideration 1. RKBK Fiscal Services P.Ltd. 100,000 0.007 10068179 UTI Bank Ltd. 9,000,000 1,500,000 10,500,000 2. Likhami Commercial Co Ltd. 9204000 0.68 10079819 -do-....