Authority for Advance Rulings (AAR) [2010-TIOL-07- ARA-IT] in the case of Amiantit International Holding Ltd. (Applicant) on the issue of whether the transfer of shares held by the Applicant in an Indian company, to its Cyprus-based 100% subsidiary under a re-organization scheme, is taxable as per the provisions of the Indian Tax Law (ITL) held that the transfer of shares did not result in any consideration and, therefore, it could not be taxed as capital gains under the provisions of the ITL. The AAR also held that even though the transfer was an international transaction between Associated Enterprises (AEs), as there was no income arising as per the charging provisions of the ITL, the transfer pricing (TP) provisions could not be applied to determine taxable gain based on arm’s length principles.
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