Taxability of Corporate Gift of Shares
Supreme Court of India; London School of Economics & Political Science (LSE); National Law University Jodhpur (NLUJ)
January 30, 2012
International Fiscal Association India Chapter Conference 2012
'Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be.' These words of Lord Tomlin in Duke of Westminster can be attributed as a pivotal ground for various amendments in the fiscal laws as the ingenuity of the tax-planners has found ways and means to structure transactions within the regime of the stated laws. Exemption from capital gains tax claimed by holding companies upon transfer of shares in subsidiary claiming the transfer as a ‘gift’; one such product of ingenious thinking from the tax-planner fraternity.
This paper examines the various decisions in India on taxability of shares gifted by Non-Resident Holding companies. The examination is multi-fold i.e. both from the perspective of transferor and the transferee as well as the differential treatment depending upon applicability of tax conventions/treaties. An attempt has been to critically analyze the decisions and appraise the legal position in as much the Income Tax Act, 1961 is concerned.
Number of Pages in PDF File: 6
Keywords: gift, shares, tax, corporate gift, India
JEL Classification: H25, H26, H29, K34Accepted Paper Series
Date posted: February 3, 2012 ; Last revised: March 6, 2012
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