DANA CORPORATION (THROUGH ITS SUCCESSOR, DANA COMPANIES LLC A SUBSIDIARY OF DANA HOLDING CORPORATION) Vs. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)

JUDGEMENT

(1.) DANA Corporation (for short DC) "through its successor company DCLLC is the applicant herein. Dana Corporation (DC) was incorporated in USA in the Commonwealth of Virginia. DHC (Dana Holding Corporation) and Dana Companies Limited Liability Company (DCLLC) are the companies established as part of reorganization of DC. DHC is 100% holding company of DCLLC. Dana merged with DCLLC. Thus, DCLLC being successor to DC, has to bear the tax liability of DC.

(2.) ON the basis of the above stated facts, the applicant desires to have a ruling on the question whether the transfer of shares of Indian companies by DC to Dana World Trade Corporation (Dana WTC) and Dana Global Products, Inc. (Dana Global) is taxable in India. The following questions are framed by the applicant for the purpose of seeking advance ruling from this Authority:

(3.) THE applicant's counsel contends that the transfer of shares is without consideration, as specifically stated in the Transfer Agreement. Even if the transfer is only a part of the overall restructuring / reorganization of DC under Chapter 1I of US Bankruptcy Code, no consideration can at all be attributed to the transfer of shares. In the absence of consideration or in determinability of full value of consideration, the computation provision in Section 48 fails and consequently, the charging provision under Section 45 cannot be invoked by the Revenue to charge the capital gains tax. The fair market value of the shares in question cannot be taken as representing the amount of consideration for the transfer of shares. The transfer pricing provisions contained in Chapter X of the Income Tax Act (Section 92 etc) cannot be made applicable to a case like the present one as there is no chargeable income under the Act.