9911796707
TMI Blog2012 (5) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... D-II), Mumbai under Section 163 (2) of the Income Tax Act, 1961. By the impugned order, the assessee has been treated as an agent of a Company based in Bermuda by the name of Techpac Holdings Ltd. Consequently, capital gains in the hands of the Foreign Company in the amount of Rs.575.39 crores are proposed to be assessed in the hands of the Petitioner as an agent under Section 163 of the Income Tax Act, 1961 for Assessment Year 2005-06. 3. The shares of Techpac Holdings Ltd. - a Bermudian Company, were held by non-resident shareholders being private equity funds and by a few resident shareholders. The Bermudian Company held under its fold several operating companies in Australia, New Zealand and Thailand and a holding company named Tech Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as recovered. The report referred to the acquisition of shares of Techpac Holdings Ltd. The First Respondent issued a notice dated 22 November 2010 to the Petitioner stating that the Petitioner was an agent of the Bermudian Company in respect of the capital gains arising to Techpac Holdings Ltd. on the transfer of its own shares in the previous year relevant to Assessment Year 2005-06. The notice recites that Ingram Micro Inc. had acquired shares of the Bermudian Company for a consideration of Australian Dollars 730 million on 10 November 2004. The take over of the Bermudian Company would, according to the notice, involve a take over of the Indian Company. This, according to the notice, resulted in capital gains arising in India on the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated as an agent under Section 163. In other words, a person can be treated as a representative assessee in respect of the income of a non-resident specified under Section 9(1). In the present case, what is sought to be brought to tax is a capital gain arising upon a transfer of shares of the Bermudian Company from the existing shareholders to the transferee shareholders. The submission is that no part of the consideration for the transfer of shares has flowed to the Bermudian Company and as a matter of first principle, income representing capital gains arising out of the transfer of shares can accrue or arise only to the transferor and not to the company whose shares are transferred. There was no accrual of income to the Bermudian Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3). 8. Having heard Counsel appearing on behalf of the Petitioner, we were prima facie of the view that the objection on the ground of limitation would have to be sustained. Consequently, we have called upon Counsel appearing on behalf of the Revenue to address submissions on that aspect of the matter. If the proceedings are barred by limitation, then, it would not be necessary for the Court to determine issues wider than those that are strictly necessary for disposal of the proceedings. Counsel appearing on behalf of the Revenue has relied upon the observations contained in paragraphs 15.1 and 15.2 of the impugned order in support of the submissions that the proceedings are not barred by limitation. No further submissions have been urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the income of the non-resident, in the hands of the representative assessee. By the impugned order, the First Respondent has held the Petitioner to be an agent of the non-resident under Section 163. Following an order under Section 163(2), a notice is liable to be issued under the provisions of Section 148. Under sub-Section (3) of Section 149 if the person on whom a notice is issued under Section 148 is a person treated as the agent of a non-resident under Section 163 and the assessment, re-assessment or re-computation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant Assessment Year. The relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute." In that case, the Income Tax Officer had issued notice to the agents of the assessee whereupon the agent took the defence of Section 149(3). The Income Tax Officer upheld their objection and dropped the proceedings since it was time barred. The Supreme Court held that the Officer had acted correctly in quashing the reassessment of the agent, since the provisions of Section 149(3) must be strictly construed. Thereafter, the Court went on to hold that this would not preclude the revenue from reassessing the assessee - merely because the revenue had taken out assessment proceedings against the agent of the assessee, which were dropped due to limitation restrictions, the revenue would not be precluded from taking out assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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