TaxTMI 
TaxTMI 
2020 (3) TMI 1325
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....f USA. STG III held its interest in STC through Cay Tel is a limited partnership formed in the Cayman Islands and tax resident of Cayman Islands. Certain USA trusts (together referred to as the "Wadhwani Trusts") held 22.10 per cent. of the share capital of STC in the aggregate. STG, STG II, STG III, Cay Tel and the Wadhwani Trusts are (hereinafter referred to as the "STG Group" or the "applicant"). 2. STC is the holding company of Symphony Teleca Services Inc., a company incorporated in the USA (hereinafter referred to as "STSI"). 3. Symphony Teleca Corporation India Private Ltd. (STCIPL), a company incorporated under the Companies Act, 1956 is a wholly owned subsidiary of Global Symphony Technology Private Limited, Mauritius (SSC Mauritius), which in turn is a wholly owned subsidiary of STSI. STCIPL is a limited risk captive software development unit of STSI and is compensated on a cost plus appropriate mark up for the services rendered. 4. During the financial year 2014-15 STCIPL has entered into share purchase agreement to acquire 99.63 per cent. of the shares of Aditi Technologies Private Limited (Aditi) an Indian company from its existing shareholders. STCIPL has rec....
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....ll be deemed to be and shall always be deemed to have been situated in India, if the shares or interest derives, directly or indirectly, its value substantially from the assets located in India. Accordingly, post amendment a share of a foreign company will be deemed as an asset situated in India if it derives substantial value from assets located in India, transfer for such shares will be chargeable to tax as "capital gains" in India. "9. Income deemed to accrue or arise in India.-(1) The following incomes shall be deemed to accrue or arise in India :- (i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, or through the transfer of a capital asset situate in India : Explanation 5.-For the removal of doubts, it is hereby clarified that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly....
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....er dated February 18, 2020 in view of notifications of rule 11UB/11UC subsequently. 11. The applicant states that even in the wake of applicability of Explanation 5 to section 9(1)(i) of the Income-tax Act, the asset value of the Indian is only 29.3 per cent. to 31 per cent. of the total assets, as such the transaction would not be taxable in India. The applicant had relied on the following case law to drive home the point that the term "substantial interest" means 51 per cent. of the voting power (CIT v. Amrutanjan Ltd. [1964] 53 ITR 218 (SC) and DIT (International Tax) v. Copal Research Ltd. [2015] 371 ITR 114 (Delhi). 12. It is submitted that though the full details and particulars of these calculations have been given to the Revenue, the same have not been in any way disputed or challenged by the Revenue. 13. The applicant submits that, however, the matter has been overtaken by the recent ruling of this hon'ble authority in the case of GEA Refrigeration Technologies GmbH, In re [2018] 401 ITR 115 (AAR) (AAR No. 1232 of 2012), which squarely covers the present case in favour of the applicant. GEA Refrigeration was a case where the shares of a foreign company were tr....
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.... Advance Rulings while deciding the assessee's application may provide the liberty to the Assessing Officer to take action in accordance with the provisions of the Income-tax Act. 18. In this case, the shares of STC (USA) held by the THLPV, solely as representative for the holders of securities of STC (including certain members of the applicant), have entered into an agreement and plan of merger for the transfer of its entire shareholding to STC, Harman International Industries Incorporated, the buyer. The share transaction, in this case is between two non-resident entities STC USA and STG Group involving the shares of STC. The said transaction between two foreign entities is primarily not liable for any taxation in India. However, in this shares of (STC USA) are transacted, which had a presence in India in the form of a subsidiary, M/s. Symphony Teleca Corporation India Private Limited (STCIPL). STCIPL is the wholly owned subsidiary of Global Symphony Technology Group Private Limited, Mauritius. The ultimate holding company of the Indian entity is STC(USA), whose shares are transacted. 19. It is a fact that during 2012 to 2016, the word "substantially" appearing in Expla....