No capital gains tax on Sanofi for Shantha deal: HC
However, Friday’s court ruling will have little effect on the high-profile Vodafone case, as the relevant deal did not enjoy any duty protection.
The government is apparently having a rethink on the retrospective amendments of Section 9 of the Income Tax Act meant to tax deals similar to Vodafone involving offshore transfer of shares, which have derived value substantially from assets located in India. Separately, informal talks are on with Vodafone on reaching an amicable settlement over the Rs 11,000-crore tax demand raised. As the law 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
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