BEFORE THE AUTHORITY FOR ADVANCE RULINGS

(INCOME TAX)
NEW DELHI
AAR No. 100 of 2015

UNDER SECTION 245Q (1) OF THE INCOME TAX ACT, 1961

INTAXICATE INDIA PVT. LTD., BANGALORE......................................APPLICANT

v.

COMMISSIONER OF INCOME-TAX, BANGALORE...RESPONDENT

WRITTEN SUBMISSIONS ON BEHALF OF THE APPLICANT

13TH SURANA & SURANA NATIONAL CORPORATE LAW

MOOT COURT COMPETITION 2015

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

DDIT

Deputy Director of Income Tax

TABLE OF CONTENTS

TABLE OF CONTENTS...........................................................................................................II
TABLE OF ABBREVIATIONS..............................................................................................IV
INDEX OF AUTHORITIES..................................................................................................VII

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

DDIT OF JURISDICTION......................................................................................XIII
Deputy Director of Income Tax
STATEMENT
STATEMENT OF FACTS....................................................................................................XIV
STATEMENT OF ISSUES.....................................................................................................XV
SUMMARY OF ARGUMETS.............................................................................................XVI
ARGUMENTS ADVANCED....................................................................................................1

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

Director ofofIncome
Tax the present application is
I. DDIT
That, on the facts andDeputy
circumstances
the case,
maintainable before this honble Authority............................................................................1
(A)

That there is no question pending before any Income Tax authority.....................2

(B)

That the transaction is not prima-facie designed to avoid income-tax..................6

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

DDITThat this authority may

Deputy
Director
of Income in
Tax
(C)
exercise
the discretion
admitting this application under
section 245R(2)..................................................................................................................6
II. That, on the facts and circumstances of the case, the buyback of shares and redemption
of convertible debentures are not colourable transactions intended to avoid payment of
taxes........................................................................................................................................7

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

DDITThat buyback of shares

Deputy
of Income
Tax debentures were legitimate
(A)
and Director
redemption
of convertible
transactions under the Companies Act, 1956 and the Companies Act, 2013.....................8
(B)

That the transactions were not colourable transactions solely intended to avoid

Indian taxes........................................................................................................................8

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

DDITThat commercial expediency

Deputy Director
Tax from the Revenues point of
(C)
is not of
toIncome
be judged
view. 8
(D)

That the form of the transaction overrides its substance.........................................9

(E)

That the effect of McDowell case has diluted.......................................................10

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

Directorofofthe
Income
III. DDIT
That, on the facts and Deputy
circumstances
case, Tax
the applicant is not liable to pay
taxes on the buy-back of shares...........................................................................................10
(A)

That buyback of shares gives rise to capital gains in the hands of IML................10

(B)

That IML is not liable to pay tax on capital gains under the Act as well as India-

Mauritius DTAA..............................................................................................................12

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

DDITThat, alternatively, dividend

Deputy Director
of Income
Taxattracted................................13
(C)
distribution
tax is not
IV.

That, on the facts and circumstances of the case, the Applicant is not liable to pay

withholding tax on the redemption of convertible debentures.............................................13

(A)

That convertible debentures are capital assets.......................................................13

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

DDITThat transfer of capital

Deputy
Director
of Income
Taxgains which will not be taxable
(B)
assets
gives rise
to capital
in India by virtue of India-Mauritius DTAA....................................................................13
(C)

That, alternatively, the amount exceeding the principal amount is capital

receipt...14

TABLE OF CONTENTSTABLE OF ABBREVIATIONS

&

And

Paragraph

Per cent

AAR

Authority for Advance Rulings

AC

Appeal Cases

AID

Assessee in Default

AIR

All India Reporter

Anr

Another

AO

Assessing Officer

AP

Andhra Pradesh

Art

Article

BBDT

Buy-Back Distribution Tax

Bom

Bombay

BOMLR

Bombay Law Reporter

CBDT

Central Board of Direct Taxes

CCD

Compulsory Convertible Debentures

Ch

Chapter

CIT

Commissioner of Income Tax

Cl

Clause

Co

Company

Commr

Commissioner

DCIT

Deputy Commissioner of Income Tax

DDT

Dividend Distribution Tax

DDITThat, alternatively, treating

Deputy Director
of Income Taxabove the principal amount as
(D)
the sale consideration
interest will lead to tax neutrality.....................................................................................15
PRAYER..............................................................................................................................XVII