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6. However, of significance are the following conclusions which appear in that order: -

"It is noticeable from the above that Headstrong Consulting Singapore Pte Ltd was holding 94.7% shareholding of Genpact India and 5.3% of the shareholding was with another group entity Genpact India Holding Mauritius before the execution of tax avoidance scheme. After the execution of tax avoidance scheme on 25.03.2015. Headstrong Consulting Singapore Pte Ltd. is holding 100% shares of the Genpact India amalgamated entity now known as Genpact India Pvt. Ltd. 100% Shareholding of Genpact India before and after the share transfer transaction is with the Genpact Group Entities only. However, these sham transaction have created an artificial liability in the balance sheet of Genpact India Pvt. Ltd. which under the garb of paying principal payment and interest payment is eroding the reserve and surplus without paying dividends distribution tax. Furthermore, the interest expense claimed on an artificial liability (funds were never used in the business of Genpact India now merged with Genpact India Pvt. Ltd) is also reducing the taxable profits of Genpact India Pvt. Ltd.

year after year starting from financial year 2014-15 and thus the interest payment on artificial liability cannot be allowed as business expense under the provision of Income Tax Act, 1961. Payment of interest on artificial liability is resulting in lowering of business profits and thus lowering of effective rate of tax. It is surprising that an entity has to bear the liability to pay the funds alongwith interest without having got any benefits or utilized the borrowed funds. This clearly indicates that it is an colourable device to avoid paying taxes in India. • After amalgamation of ERKS with Genpact India. the investments of ERKS into the shares of Genpact India amounting to Rs.9,131,72,51,438/- has been taken to goodwill account in newly formed entity ERKS n k aGenpact India Pvt. Ltd. • If, Genpact India now merged into ERKS, had to declare dividend to the holding companies/share holders i.e. Headstrong Consulting Singapore Pvt Ltd then as per Income Tax Act and India Singapore Treaty. Empower Research Knowledge Services Pvt Ltd. (ERKS) was required to pay Dividend Distribution Tax and then make payments.

iv Genpact Global Holdings (Bermuda) Ltd as common Holding Company of both payer of funds in the form of debenture (Genpact Luxembourg SARL) and receiver of funds in the form of Capital Gain (Headstrong Consulting Singapore Pte): It is pertinent to mention here that as per annual report of Genpact India Pvt Ltd (ERKS) and ITR of Genpact Luxembourg SARL both have a common holding company namely Genpact Global Holdings (Bermuda) Ltd. This aspect clearly establishes that it was circulation of funds between two entities of a common holding company just to create a fictitious liability in the balance sheet of Genpact India which had multifarious tax benefits."

9. Quite apart from the view which the Tribunal has come to express, we find that the order of the Commissioner is clearly rendered unsustainable on a more fundamental plane. As is evident from the extracts of the order passed in revision, the principal allegation appears to have been that the device adopted by Genpact India was intended to avoid the payment of DDT as contemplated under Section 115-O. Undisputedly, that dividend would have to be one which would have been declared by Genpact India. We are, however, and in the present case, concerned with an assessment proposed to be made in the hands of Headstrong HCS, now known as Genpact Consulting Pte. We thus find ourselves unable to appreciate how a perceived liability in the hands of Genpact India could be viewed or considered as being relevant for the purposes of formation of opinion that the assessment of Genpact Consulting was erroneous and prejudicial to the Revenue.