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TMI Blog2012 (5) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the Revenue in bringing to tax the capital gains arising out of the transfer of shares of the Bermudian Company because according to the Revenue, this involved the transfer of a capital asset in India - the plain consequence of the provisions of Section 149(3) is that no assessment, re-assessment or re-computation can take place after 31 March 2008 - Decided in favor of the assessee - WRIT PETITION NO. 285 OF 2011 - - - Dated:- 30-11-2011 - DR. D.Y. CHANDRACHUD A.A. SAYED, JJ. Jahangir Mistry, N.J. Thakkar and Atul Jasani for the Petitioner. B.M. Chatterjee for the Respondent. JUDGMENT Dr. D.Y. Chandrachud, J .- Rule, by consent returnable forthwith. With the consent of Counsel and at their request the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnology distributor in the Asia Pacific Region with an extensive presence inter-alia in India. Ingram Micro Inc., a company incorporated in the U.S. was a technology distributor with a presence in the worldwide information technology industry. Ingram Micro Asia Holdings (a U.S. based company) held a subsidiary in India by the name of "Ingram Micro India Private Limited". In 2004, Ingram Micro Asia Holdings Inc. acquired shares of the Bermudian Company under a Share Purchase Agreement, Those shares were transferred on 10 November 2004. Pursuant to the acquisition, the Indian entity of the Ingram Group merged into the Indian entity of the Tech Pacific Group. The name of the Indian subsidiary was changed to its present name, namely, the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would not be given effect to for a period of four weeks. The First Respondent has passed an order dated 14 January 2011 which is impugned in these proceedings. By the impugned order the First Respondent has held that there is a business connection between the Petitioner and the Bermudian Company. The Overseas Company has been held to have a 23% business interest in the India operations. The accrual of capital gains in the hands of the Bermudian Company is proposed to be assessed in the hands of the Petitioner under Section 163 in the amount of Rs. 575.39 crores for Assessment Year 2005-06. 7. Counsel appearing on behalf of the Petitioner has assailed the order that was passed under Section 163 on two grounds; (1) Firstly, it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the provisions of Section 153(b). Reliance on those provisions of Section 153(b) cannot be said to obviate the bar of limitation in this case because the search was of the Indian Company and not of the person who is sought to be assessed. The assessment of the Indian Company is a separate assessment altogether and in the present case, the assessment is of the income of the non-resident. The Petitioner being treated as an agent of the non-resident Bermudian Company, the limitation for initiating proceedings would expire on 31 March 2008 which was two years of the end of the relevant Assessment Year. The notice which was issued on 22 November 2010 was barred by limitation. Learned Counsel submitted that Section 149 of the Income Tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident; or (b) Who has any business connection with the non-resident; or (c) From or through whom the non-resident is in receipt of any income, whether directly or indirectly; or (d) Who is the trustee of the non-resident and includes also any other person who, whether a resident or non-resident, has acquired by means of a transfer, a capital asset in India. Sub-section (2) of Section 163 provides that no person shall be treated as the agent of a non-resident unless he has had an opportunity of being heard by the Assessing Officer as to his liability to be treated as such. What needs emphasis is that under Clause (i) of Section 160(1) a person is treated as a representative assessee in respect of the income of a non-resident where he is eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was clearly in error in relying upon the provisions of Section 153(B). The search and seizure operation took place in respect of the Indian company but it is an admitted position that what is sought to be brought to tax as capital gains are capital gains alleging to accrue to the Bermudian company. The Petitioner is treated as a representative assessee on the finding that it is an agent within the meaning of Section 163. In other words, what is brought to tax in the hands of the Petitioner is the capital gains which are stated to accrue to the Bermudian company. The provisions of Section 153(B) would therefore clearly not have any application. The judgment of the Supreme Court in Claggett Brachi Co. Ltd., v. CIT [1989] 177 ITR 409/44 T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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