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 RESPONDENT

13TH SURANA & SURANA NATIONAL CORPORATE LAW

MOOT COURT COMPETITION 2015

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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

Del

Delhi

DIT

Director of Income Tax

DTAA

Double Tax Avoidance Agreement

TABLE OF CONTENTS

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

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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

Del

Delhi

DIT

Director of Income Tax

DTAA OF JURISDICTION.......................................................................................XII
Double Tax Avoidance Agreement
STATEMENT
STATEMENT OF FACTS.....................................................................................................XIII
STATEMENT OF ISSUES...................................................................................................XIV
SUMMARY OF ARGUMETS...............................................................................................XV
ARGUMENTS ADVANCED....................................................................................................1

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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

Del

Delhi

DIT

Director of Income Tax

Double Tax Avoidance

Agreement
I. DTAA
That, on the facts and circumstances
of the case,
the application is not maintainable
before this honble Authority.................................................................................................1
(A)

That the application attracts the bar under section 245R of the Act........................1

(B)

That the instant Application seeks a ruling on transactions from the year 2003 to

2014, which is impermissible.............................................................................................8

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Assessee in Default

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All India Reporter

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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

Del

Delhi

DIT

Director of Income Tax

Double Tax of
Avoidance
II. DTAA
That, on the facts and circumstances
the case,Agreement
the buyback of shares and redemption
of convertible debentures are colourable transactions intended to avoid payment of taxes.. 8
(A)

That the use of a colourable device is impermissible in law....................................9

(B)

That, the buy-back of shares was a scheme for avoidance of tax as it was a

colourable device...............................................................................................................9

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AID

Assessee in Default

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All India Reporter

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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

Del

Delhi

DIT

Director of Income Tax

DTAAThat, the redemptionDouble

Tax Avoidance
Agreement
(C)
of convertible
debentures
was a scheme for avoidance of tax
as it was a colourable device............................................................................................10
III.

That, on the facts and circumstances of the case, the applicant is liable to pay

dividend distribution tax on the buy-back of shares............................................................10

(A)

That the Applicant is liable to pay tax on its payment of dividend to IML...........10

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Assessee in Default

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All India Reporter

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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

Del

Delhi

DIT

Director of Income Tax

DTAAThat, alternatively, IML

Double
Tax Avoidance
Agreement
(B)
is liable
to pay tax under
Section 115JB of the Act........11
(C)
IV.

That, alternatively, transfer pricing provisions will attract tax liability.................12

That, on the facts and circumstances of the case, the assesse is liable to pay

withholding tax on the redemption of convertible debentures.............................................12

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Authority for Advance Rulings

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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

Del

Delhi

DIT

Director of Income Tax

DTAAThat redemption of Double

Tax Avoidance
(A)
convertible
debenturesAgreement
partakes the character of a debt and
interest payment transaction.............................................................................................12
(B)

That all amounts exceeding the principal amount paid by IIPL to IML is

chargeable to tax...............................................................................................................13
(C)

That, alternatively, the consideration received by IML is not a capital receipt.....14

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Authority for Advance Rulings

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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

Del

Delhi

DIT

Director of Income Tax

DTAAThat, alternatively, there

Double
Taxtax
Avoidance
(D)
is no
neutralityAgreement
as alleged by the applicant by virtue
of section 14A of the Act..................................................................................................15
PRAYER...............................................................................................................................XVI