Redington India Limited (RIL) established a wholly-owned subsidiary Redington Gulf (RG) in the Jebel Ali Free Zone of the UAE in 2004. The subsidiary was responsible for the Redington group’s business in the Middle East and Africa. Four years later in July 2008, RIL set up a wholly-owned subsidiary company in Mauritius, RM. In turn, this company set up its wholly-owned subsidiary in the Cayman Islands (RC) – a step-down subsidiary of RIL. On 13 November 2008, RIL transferred its entire shareholding in RG to RC without consideration, and within a week after the transfer, a 27% shareholding in RC was sold by RG to a private equity fund Investcorp, headquartered in Cayman Islands for a price of Rs.325.78 Crores. RIL claimed that the transfer of its shares in RG to RC was a gift and therefore, exempt from capital gains taxation in India. It was also claimed that transfer pricing provisions were not applicable as income was exempt from ... Read more

Valuation of intangibles in relation to the merger of KT Corp (owned by the parents) and CS Corp (owned by their three sons). In valuing the two companies for the purposes of the merger they incorrectly assumed that CS Corp owned Intangibles that were in fact owned by KT Corp. The Tax Court found, that the valuation of the intangibles reasonably determined the fair market value, and concluded that gifts totaling $22.8 million was transfered to the three sons on December 31, 1995. TC Memo KT 2019-144 US vs. Cavallaro Oct 24 2019 ... Read more

The appellant O.V. disagreed with the tax authority’s conclusion that the rent he paid to his father was not at the normal rate. In support of this claim, he submitted evidence. In connection with the conclusion of the donation contract, the O.V. became both the person liable and the beneficiary of a large easement over the property on plot No 31/1 and the co-owner of the land under the leased building, which was evidenced by documentary evidence, but which the tax administrator ignored and failed to assess. However, these are decisive facts which, in normal commercial relations, have a significant influence on the amount of rent. O.V. also rejected the method of calculating the normal price, which the tax authority determined on the basis of the arithmetic average of the lease contracts selected by it. It considers that this procedure is unlawful because the taxpayer has no possibility of obtaining input information. The normal price can be determined as the ... Read more