IN RE: GOODYEAR TIRE AND RUBBER COMPANY; GOODYEAR ORIENT COMPANY (PRIVATE) LIMITED Vs. STATE

JUDGEMENT

(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.) WHETHER GOCPL, the recipient of shares, is required to withhold tax in accordance with the provisions of Section 195 of the Act?