Page 36 - CafeSocial-July-2021

section.9 of IT stated that: An asset or a proposed to restore the principle amount of
capital asset, being any share or interest in a the retrospective tax paid by the concerned
c o m p a n y o r e n t i t y re g i s t e re d o r legal entities. Subject to certain conditions
incorporated outside India, shall be deemed only will the legal entities be able to reap the
to have been situated in India, if the share of benefit of the amendment:
the interest derives, directly or indirectly, its
value substantially from the assets located 1. The companies will have to withdraw
in India. all the pending cases in respect of
retrospective taxation
At t h a t t i m e, m a j o r ove rs e a s
organisation has warned retrospective 2. Furnishing of an undertaking that no
taxation would hurt investor sentiment, as it claims for interest, cost, damages etc. will be
would create a new tax burden on the filed against government of India
transaction that was not taxable at the time
it was carried out. This in turn would make CONCLUSION
the investors vary of the unpredictable With the havoc which Covid-19 has
scenario which would hurt their pockets in
the long run. And they were right in their caused to the economy of India, the
reasoning of the Finance ministry was that
prediction.
they want to make India as investor friendly
as possible. But on the other hand, it is
By 2021, there are about 17 cases in
popularly believed that due to the pressure
progress against the retrospective taxation.
Among these, the four high stack cases which posed by the Vodafone and Cairns case, the
government has no choice but to bring
the finance ministry is eager to resolve are
about this amendment in order to save
Cairn energy & PUCL (USD $1.2 Billion), New themselves from long drawn disputes. Now, it
singular wireless (USD $16.03 million), WNS depends on the affected companies
Capital (USD $6.33 million) and Vodafone
whether they want to abide by the
(USD $6.03 million). As per CBDT Chairperson
conditions imposed by the Government and
JP Mohapatra told media recently, the Indian resolved the matter amicably or keep on the
government will have to pay roughly USD path of pursuing damages through dispute
$1.075 Billion to the above stated four resolution, hoping to get a favourable award
companies, excluding interests, costs and eventually.
damages.
( Adv. Nalini Mishra, Author is an Associate
2021 AMENDMENT- A SMART STRATEGY Partner of Singhania & Co. LLP, assisted by Ms.
OR AN EXERCISE IN FUTILITY Pratibha Sharma, Legal Intern)
With an unexpected but highly The views expressed herein are those of the
applauded move, the government has
author and do not necessarily reflect the views
introduced the Income tax amendment bill of Singhania & Co. LLP or its partners.
of 2021. While not omitting the 2012
amendment from the statue, the 2021
amendment only add that no tax demand
will be raised based on 2012 retrospective
amendment on indirect transfer of Indian
assets. For this benefit to arise, the transfer of
shares shouldn't have taken place after 2012.
While this amendment will only apply for
retrospective tax paid for transfer of shares
prior to 2012, the government has also

36 JULY 2021