Tuesday, July 30, 2013

Sham transaction of buy-back of shares is dividend, attracts section 115-O

 

Sham transaction of buy-back of shares is dividend, attracts section 115-O

Only a genuine buyback is excluded from the definition of 'dividend' under section 2(22)(iv) and exempt from DDT under section 115-O. Where proposed transaction of buy-back of shares is a colourable transaction, the consideration received from such buy-back will satisfy the definition of dividend under the Act and consequently attract tax in India under section 115-O - A MAURITIUS, IN RE [2012] 20 taxmann.com 52 (AAR)

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