Case nº A.A.R. Nos. 1006 and 1031 of 2010 of Authority for Advance Rulings, May 02, 2011 (case In Re: Goodyear Tire and Rubber Company; Goodyear Orient Company (Private) Limited Vs)
| President | P.K. Balasubramanyan, J. (Chairman), J. Khosla and V.K. Shridhar, Members |
| Resolution Date | May 02, 2011 |
Judgment:
V.K. Shridhar, Member, (New Delhi)
1. The applicant in AAR No. 1006 of 2010 is Goodyear Tire & Rubber Company, USA (GTRC), a company incorporated under the laws of Ohio, USA. The applicant in AAR No. 1031 of 2010 is Goodyear Orient Company (Private) Limited, Singapore (GOCPL), a company incorporated under the laws of the Republic of Singapore. The Goodyear India Limited (GIL) is a public company incorporated under the Companies Act, 1956, and listed on the Bombay Stock Exchange. GTRC is the promoter of GIL and presently holds 17,069,215 equity shares representing 74% of the total paid up capital of GIL. The remaining 26% shareholding is presently held by public shareholders. GOCPL is a wholly owned subsidiary of GTRC.
2. The applicant, GTRC, submits that as part of its global corporate strategy, it is contemplating a reorganization of its investment in its Indian arm, GIL. It is seeking to expand the role of its Singapore based GOCPL for the benefit of its other group entities within Asia-Pacific Region by making it a financially strong and important entity of the group. GOCPL is an operating company and manages the natural rubber purchasing, delivery, financing, treasury and quality of the worldwide operations of GTRC and as such there is commonality of business interests of the group with GIL. With this end in view, the applicant proposes to enter into a Share Contribution Deed (SCD) to contribute voluntarily the entire 74% shares it holds in GIL to GOCPL, without any consideration. Based on the above facts, as the transfer of shares would be voluntarily and without any consideration, the applicants, GTRC and GOCPL desire to know their tax liabilities under the Income Tax Act, 1961 (Act).
3. The applicant, GTRC, has sought a ruling on the following questions:
1. Whether the Applicant is liable to tax in India under the provisions of Section 45 read with Section 48 or under any other provisions of the Income-tax Act, 1961 ("Act") in relation to the proposed contribution of its shares in Goodyear India Limited ("GIL") to Goodyear Orient Company (Private) Limited ("GOCPL") without consideration?
2. Whether the proposed contribution of shares by the Applicant to GOCPL attracts the transfer pricing provisions of Section 92 to Section 92F of the Act?
3. Whether, under the above mentioned transaction, the Applicant is required to deduct any tax under Section 195 of the Act in relation to the proposed contribution of shares to GOCPL?
4. Whether GOCPL, the recipient of shares, is required to withhold tax in accordance with the provisions of Section 195 of the Act?
4. The applicant, GOCPL, has sought a ruling on the following questions:
1. Whether the Applicant is liable to tax in India in respect of the contribution of shares of Goodyear India Limited ("GIL") to the Applicant by Goodyear Tire & Rubber Company ("GTRC") in light of the provisions of Section 56 of the Income Tax Act, 1961 ("Act")?
2. Whether GTRC is required to withhold tax on the aforesaid contribution of shares in accordance with the provisions of Section 195 of the Act?
3. Whether the Applicant is required to withhold tax in accordance with the provisions of Section 195 of the Act on receipt of shares from GTRC?
4. Whether the proposed contribution of shares by GTRC to the Applicant attracts the transfer pricing provisions of Section 92 to Section 92F of the Act?
The applicant in AAR No. 1006 of 2010, Goodyear Tire & Rubber Company, USA (GTRC)
5. The applicant, GTRC, by referring to the proposed SCD, submits that the Clause 2.1 stipulates that all present and future rights, title and interest in the shares of GIL will be contributed to GOCPL. The recitals in Clause 2.5 stipulates execution and delivery of such further instrument of conveyance and such other action as may be necessary to convey and transfer to CGOPL good title and possession of the contributed shares. The recital in Clause 2.4 stipulates that the contribution is made without consideration and GOCPL is not liable to compensate the applicant for the contribution of shares at any time and in relation to the...
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