Income deemed to accrue or arise in India

The sale of Indian company shares (Idea Cellular shares) held by AT&T USA through AT&T Mauritius to Tata and Aditya Birla Nuvo — Capital gains arising or accruing to non-resident on the transfer of a capital asset situated in India to an Indian company can be assessed in the hands of the non-resident or in the hands of the Indian company as an agent of that non-resident under s 163, as the same would be income deemed to accrue or arise in India to said non-resident, as held by MumHC in Aditya Birla Nuvo Limited and Others v Dy CIT and Others — In favour of: The revenue; Writ Petition Nos 730, 1837 of 2009, 345, 38 of 2010.

Deduction at source — As the payer had obtained the certificate under s 195(2) by making a representation which was incorrect to its knowledge, it could not claim that the certificate under s 195(2) was validly issued.

The proceedings under s 163 and s 195 operate in completely different fields and, therefore, the certificate issued under s 195 of the Act does not preclude the AO from initiating proceedings under s 163 of the Act.

Assessment — Assessment proceedings can be initiated simultaneously against the resident and the non-resident.

Decided on: 14 July 2011.