CAPITAL GAIN ::

Last updated: 18 November 2007

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Court :
HC

Brief :
Held by the Hob`ble Authority that as per article 13(5) of the DTAA between India & Netherlands in case of corporate reorganisation where the transferor or transferee owned atleast 10% of the capital of the other, the capital gain on such transfers could only be taxed in the State where the transferor is resident. Hence the transfer of 100% shares of wholly owned Indian Subsidiary Company by the Foreign Holding Company (resident in Netherlands) to its another Foreign Subsidiary Company (resident in Netherlands) would be taxable in Netherlands and section 90(2) shall be applied to the extent these were more beneficial.

Citation :
Vanenburg Group B.V.,In re Vs.

Capital Gain Vanenburg Group B.V.,In re Vs. 01/31/2007 [2007] 289 ITR 464(AAR) Case Fact: Whether the transfer of 100% shares of wholly owned Indian Subsidiary Company by the Foreign Holding Company (resident in Netherlands) to its another Foreign Subsidiary Company (resident in Netherlands) will attract capital gain tax in India? Decision: Held by the Hob`ble Authority that as per article 13(5) of the DTAA between India & Netherlands in case of corporate reorganisation where the transferor or transferee owned atleast 10% of the capital of the other, the capital gain on such transfers could only be taxed in the State where the transferor is resident. Hence the transfer of 100% shares of wholly owned Indian Subsidiary Company by the Foreign Holding Company (resident in Netherlands) to its another Foreign Subsidiary Company (resident in Netherlands) would be taxable in Netherlands and section 90(2) shall be applied to the extent these were more beneficial.