stands today, the amendment covers all such offshore transactions.
The Parthasarathi Shome committee has voted against retrospective applicability of the law on indirect transfer of assets brought in through the Finance Act, 2012, but proposed some clarifications that would substantially reduce the irritant nature of the law, regardless of whether past cases remain within its domain.
It said the government should apply the provision only to the taxpayer who earned capital gains (the seller) and suggested that no taxpayer in such cases be asked to pay interest and penalty on the tax computed.
The Sanofi case came up for hearing on Friday and law firm Economic Laws Practice appeared for the petitioners. Rohit Jain, partner, Economic Laws Practice, said: “This is a good judgment and sets out the law as applicable by the Indo-French treaty which continues even after retrospective amendments.”
According to the counsel, the transaction of the sale of shares of ShanH by the French company Sanofi is not a design for tax avoidance. The transaction is chargeable to tax in France, in terms of the provisions of the DTAA, and retrospective amendments to the Income Tax Act have no impact on the DTAA.
Earlier also, the Andhra Pradesh High Court had dismissed the plea of the tax authorities against the Authority for Advanced Rulings (AAR) admission of Sanofi’s application regarding the Shantha Biotech deal.