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CMA Final · Direct Tax Laws and International Taxation · Business Restructuring

Raman Pharma Ltd, an Indian company, transfers its customer lists and trained workforce arrangements to its Singapore associated enterprise as part of a group reorganisation. For the definition of an international transaction under the Income-tax Act, 2025, how are these items classified?

Both items are intangible property. The Act's inclusive definition lists customer lists under customer related intangibles and a trained and organised workforce under human capital related intangibles, so the transfer to the associated enterprise involves intangible property.

  1. ACustomer lists and the trained and organised workforce both fall within intangible propertyCorrect
  2. BOnly customer lists are intangible property; workforce is tangible
  3. CNeither is intangible property, as only patents and trademarks qualify
  4. DOnly the workforce is intangible property; customer lists are marketing assets outside the definition

Explanation

Section 163(3) lists customer related intangible assets such as customer lists and human capital related intangible assets such as a trained and organised work force. Both are therefore intangible property. The option limiting intangibles to patents and trademarks ignores the wide inclusive list.

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