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The Tax Publishers Interroute Communications Ltd. v. Dy. DIT [IT Appeal No. 2284 (Mum.) of 2014, dt. 31-3-2016] : 2016 TaxPub(DT) 1841 (Mum-Trib) Enhanced consideration on sale of shares arising due to delay whether interest and taxable in India in the hands of a non-resident. *Facts:* Assessee was a sub-participant FII of Morgan Stanley India. It held shares of I Flex. Arising out of an offer for sale I Flex shares were sold by the assessee to Oracle Global Mauritius. There was delay in opening the open offer thus the price got revised from INR 2084 to 2100 as interest due to delayed offer. The original consideration of 2084 was held to be capital gains exempt as per the DTAA with Mauritius. The assessing officer held that the enhanced consideration of 16 which arose as interest on the consideration due to delayed remittance of the offer for sale as interest under section 2(28A). Oracle had done TDS at 41.82% thus the assessing officer read it as taxable receipt and also not falling in the scope of section 115AD concessional rate. Thus the assessment completed under scrutiny mode was re-opened. On appeal: Held in favour of the assessee that the additional consideration also formed part of the sale of shares thus was exempt capital gain as per the DTAA. Genesis Indian Investment Company Ltd.ITA/2878/Mum /2006 /dtd. 14-8-2013 applied on similar facts.

The Tax Publishers

Interroute Communications Ltd. v. Dy. DIT [IT Appeal No. 2284 (Mum.) of 2014, dt. 31-3-2016] : 2016 TaxPub(DT) 1841 (Mum-Trib)

Enhanced consideration on sale of shares arising due to delay whether interest and taxable in India in the hands of a non-resident.

Facts:

Assessee was a sub-participant FII of Morgan Stanley India. It held shares of I Flex. Arising out of an offer for sale I Flex shares were sold by the assessee to Oracle Global Mauritius. There was delay in opening the open offer thus the price got revised from INR 2084 to 2100 as interest due to delayed offer. The original consideration of 2084 was held to be capital gains exempt as per the DTAA with Mauritius. The assessing officer held that the enhanced consideration of 16 which arose as interest on the consideration due to delayed remittance of the offer for sale as interest under section 2(28A). Oracle had done TDS at 41.82% thus the assessing officer read it as taxable receipt and also not falling in the scope of section 115AD concessional rate. Thus the assessment completed under scrutiny mode was re-opened. On appeal:

Held in favour of the assessee that the additional consideration also formed part of the sale of shares thus was exempt capital gain as per the DTAA. Genesis Indian Investment Company Ltd.ITA/2878/Mum /2006 /dtd. 14-8-2013 applied on similar facts.