A
scheme of arrangement u/s 391 to 394 of the Companies Act was entered into
which provided that five private limited companies would be merged with Unichem
Laboratories. Pursuant to the Scheme, (a) the entire undertaking of the
transferor companies would stand vested with the transferee, (b) The shares
held by the transferor companies in the transferee company would be
cancelled& (c) shares of the transferee company would be issued to the
shareholders of the transferor companies. The scheme was challenged by a
shareholder on the ground that it was propounded to avoid capital gains tax
that would have arisen if the transferor companies would have directly
transferred their shares to the promoters and that it was a “colourable device
to evade tax”.Reliance was placed on McDowell 154 ITR 148 (SC), Wood
Polymer 47 CC 597 (Guj) & Groupe Industrial Marcel Dassault
(AAR). HELD by the High Court rejecting the objection:
Please follow the below case for the details of the case:
http://itatonline.org/archives/index.php/in-re-avm-capital-services-private-limited-bombay-high-court-tax-planning-is-legitimate-if-it-is-within-the-framework-of-the-law
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