Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: form 3cd :: TDS :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: VAT Audit :: VAT RATES :: Central Excise rule to resale the machines to a new company :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: ACCOUNTING STANDARDS
 
 
From the Courts »
 Ravneet Takhar Vs. Commissioner Of Income Tax Ix And Ors.
 Jaiprakash Associates Ltd. Vs. Commissioner Of Income Tax
 Formula One World Championship Limited Vs. Commissioner Of Income Tax, International Taxation-3 And Anr.
 Commissioner Of Income Tax International Taxation-3 Delhi Vs. Formula One World Championship Ltd. And Anr.
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)
 Ashok Prapann Sharma vs. CIT (Supreme Court)a
  Vatsala Shenoy vs. JCIT (Supreme Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 M.K.Overseas Pvt. Ltd. Vs. Pr.Commissioner Of Income Tax-06
 Arshia Ahmed Qureshi Vs. Pr. Commissioner Of Income Tax-21

Genuine business recasts can bring in tax benefit: ITAT
May, 05th 2010

In a decision that will help corporates restructure businesses, the Chennai bench of Income-tax Appellate Tribunal (ITAT) has held that tax benefit could not be denied to business restructuring, if the exercise fulfills all the conditions mentioned under the Income-Tax Act.

The ruling in the case of Chennai-based TVS Motors Company comes as a relief to all corporates which are at dispute with the I-T department for tax benefits denied to genuine amalgamation or business restructuring. Such disputes arise when tax authorities view it as an exercise intended to avoid tax; corporates argue that the restructuring is for business convenience. The ITAT decision is in tune with the I-T laws governing such issues, said senior chartered accountant TP Ostwal.

The case revolved around a composite scheme of arrangement involving TVS Motors, which held over 66% stake in Laxmi Auto Components (LAC). LAC had transferred its rubber and plastic division to another group company, Sundaram Auto (SAC). At the time, the rest of LAC, including the engine components business, investment in SAC and other investments were transferred to TVS Motors.

The scheme of rearrangement was cleared by the Madras High Court. However, the assessing officer declined to accept it as an amalgamation on the ground that the full assets and liabilities of LAC were not transferred to TVS Motors, and therefore, do not fulfil the conditions required for tax neutrality of an amalgamation. According to him, the exercise at best could be described as rearrangement under Section 391 to 394 of the Companies Act, and therefore, not an amalgamation. The assessing officer, thus, taxed the capital reserve arising out of amalgamation, disallowed the depreciation claims arising from the transfer of LACs assets to TVS and also denied the credit for the dividend distribution tax paid by LAC.

The ITAT did not accept the I-T departments stand. The tribunal held that amalgamation as well as rearrangement are dealt under Sections 391 to 394 of the Companies Act, and therefore, there is no merit in the departments decision to deny tax neutrality to a restructuring exercise. When all assets and liabilities are taken over by a company, such an exercise can be considered an amalgamation. In this case, the tax department could not prove that some assets were left behind. ITAT further observed that there is no merit in the contention that the whole exercise was meant for avoiding tax.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Article Management Solutions System Article Management Software S

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions