Wants capital gains tax on shares transfer.
The Income Tax Department has petitioned the Bombay High Court against a ruling of the Authority for Advance Ruling (AAR) in the case of the STAR Group’s amalgamation. The hearing is slated for February 18.
The STAR Group had decided to consolidate its Indian language channels into its Indian group company, STAR India Pvt Ltd. While STAR Television Entertainment Ltd (SEL) and STAR Asian Movies Ltd (SAML), incorporated in the British Virgin Islands, broadcasts entertainment channels STAR Plus and STAR Gold, STAR Asian Region FZ LLC (SAR), incorporated in UAE, broadcasts STAR One and STAR Utsav.
Accordingly, an amalgamation of STEL, SAML and SAR into SIPL was proposed, pursuant to which all assets and liabilities of the amalgamating companies would stand transferred to SIPL. In turn, SIPL would issue shares to the shareholders of the amalgamating companies in a certain ratio. The scheme of amalgamation is presently pending sanction of the high court here.
The AAR had held that no capital gains tax liability would arise under the Income Tax Act, 1961, in respect of transfer of shares/ assets forming part of the terms of an amalgamation, rejecting a contrary plea of the I-T department. AAR also refused to deny the benefit of capital gains tax exemption on the ground that the amalgamation is without any commercial or business purpose.
