Corporate business Tax Benefits

Corporate business Tax Benefits
Authority for Advance Ruling (AAR) held that restructuring of businesses cannot be construed as an exercise for avoiding tax in India.
AAR, a quasi judicial body for settling tax disputes involving foreign entities, in an order last week on an application filed by the Star Group companies, held that any tax benefit resulting from the restructuring of businesses cannot be a ground for income-tax (I-T) authorities to conclude that the entire exercise was for avoiding tax.
The parties that applied before AAR were Star Television Entertainment (STEL), the entity which owns Star Plus TV channel, and Star Asian Movies (SAML), which owns Star Gold, and Star Asia Region, the owners of Star Utsav and Star One. While STEL and SAML are based in British Virgin Islands, Star Asia Region is based in the United Arab Emirates (UAE). These three companies have been amalgamated with the Indian company Star India with effect from April 1, 2009.
The AAR, however, observed that since the amalgamation includes taking over all assets and liabilities, which also included tax recoverable, tax avoidance cannot be seen as the objective of the Star Group. Besides, the department is proposing to intervene in the matter in the high court, it is free to request for appropriate direction for recovery of the I-T arrears. Thanks Economic Times

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