In order to cover proposed transaction under section245N, the partnership firm and subsidiary-company have to exist in reality with
which that transaction is to be undertaken.
Facts:
1) The
applicant-company, registered in UAE, is engaged in the business of developing
and investing in the infrastructure and real estate sector. It intends to
invest in a 100% subsidiary company in India under the prevailing FDI
regulations;
2) This
Indian subsidiary company of the applicant intends to set-up a consortium by
way of partnership firm with another Indian company, namely, MEPPL;
3) This
consortium proposes to acquire the undertaking of MEP Infra Private Limited
which is engaged in the business of operating and maintaining of roads and
bridges in Mumbai.
The
applicant seeks ruling, interalia, on
the following question:
Whether, the transfer of Undertaking of MEP Infra
Toll Road Private Limited to the
partnership firm would affect the allowability of deduction under section80IA(4)(i) to the partnership firm?
The
Authority held as under:
1) In
order to apply the provisions of section 245N, there has to be either a
transaction undertaken or proposed transaction to be undertaken by the
non-resident applicant. This is not the case in the present application;
2) The
question relates to proposed setting-up of the subsidiary and the partnership
firm with the Indian company and as to whether the subsidiary or the
partnership firm would be eligible to 100 per cent deduction under section80IA?;
3) The
100 per cent subsidiary company has to exist in reality and the partnership
firm has to be set-up in order to make transaction or proposed transaction of
the applicant with the Indian company or subsidiary;
4) Thus,
the question posed does not fall under the purview of this Authority.
Consequently, the application is to be rejected - Trade Circle
Enterprises LLC, In re [2014] 42 taxmann.com 287 (AAR - New Delhi)
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