The law is settled that when a foreign company holding shares in an Indian company, sells the shares of the Indian company to another non-resident, the capital gains on such sale will be chargeable to tax in India. In such a situation, the transfer of shares would take place outside India. The transfer deed would also be executed outside India and the consideration for transfer would also arise outside India. Nevertheless, since the transaction would involve the transfer of shares of an Indian company, the resulting income shall be deemed to accrue or arise in India by virtue of Section 9(1)(i) of the I-T Act. Hence the same would be taxable as capital gains in India.