Wednesday, October 2, 2013

Vodafone - Being Immortalised >>>Ghost Of Vodafone - Persists In Haunting As Ever !

An Update (latest):


 [2014] 49 249 (SC)
Commissioner of Income-tax (Central)-I, New Delhi   v.
Vatika Township (P.) Ltd.

SC discusses the evils of retrospective law while upholding the principle "that unless a contrary intention appears, a law is presumed to be prospective" but stops short of holding substantive retrospective amendments hurting tax payers as unconstitutional .


 Nov 19 

Calling it a tax on foreign direct investment, Shell India moved the Bombay High Court in April last year. The court rejected the tax department’s argument that the Shell case was distinguishable from Vodafone’s case, which won a similar reprieve in October.

“The Shell India case is significant. It follows the earlier Vodafone judgment — the principle being that issuance of shares by an Indian company to its foreign parent is not exigible to transfer-pricing provisions, as there is no income arising therefrom,” said Mukesh Butani, managing partner of BMR Legal, which represented Shell India.

The Bombay High Court judges, M S Sanklecha and S C Gupte, set aside the tax department’s order over jurisdiction and did not get into the valuation of the shares.

FinMin may drop retro tax law to end Voda row




( on the (ball of tax) controversy kicked off and set /kept rolling on, on.on and on....)


latest but not the LAST ?!


Ashamed To Be Indian: Mohan Parasaran, Solicitor General

Editorial Staff 

Solicitor General Mohan Parasaran, who is highly regarded for his legal acumen, court craft and ice-cool temperament, has, on the eve of his resignation from the post, spoken his heart out on the ills plaguing the country and what can be done to salvage the situation. 



Picks up equity stakes held by Analjit Singh and Piramal Enterprises for Rs. 10,142 cr »

06 Apr
'Liberalisation'!- Concerned/responsible authorities or bureaucrats, for that matter even the self-professed 'economic experts' all around, may, to save own face(s), choose to SO call or dub the foreseen new developments. Nonetheless, the fact of life/the underlying truth, easily decipherable  if were to care to be guided by common sense, in one's long-standing conviction, is , - this is yet another instance of its not-so unfamiliar type but off and on come across, - a 'climb down' or 'roll back' of decisions taken earlier in the name of 'policy making' , with no proper application of mind /home work- any second opinion ?
But then all such ongoing experiments ('shifting sands' or 'turn coat'!- too often, in the utmost quick succfession, chasing on the heels- none knows how many and how shortlived or otherwise or even take off , efen before maeev a note of )  are, from the viewpoint of the nation's economic welfare, -what IS THE rule of the game at any given point in time / moment)-at what or WHOSE COST is the intricate point for deliberation ? Any intelligent thoughts?
 iMPULSIVE, iNSTABILITY, .... - is that thine name ?


Mar 25 '14
 Look Back (old Blogs)

November 30th, 2013
Download: vodafone_share_premium_TP_.pdf

Transfer Pricing: Existence of income is a jurisdictional requirement for the applicability of T. P. provisions. AO must deal with it after giving personal hearing before making reference to TPO. The dept should not treat the assessee as an adversary who has to be taxed, no matter what
The dept should not treat the assessee as an adversary who has to be taxed, no matter what >
With wisdom gathered in hindsight, and keeping in backdrop past experience of taxpayers in general, the HC’s critical and forthright observation is, by any yardstick, too mild a reproach to be taken a conscious and serious note of , not only by the AO but also by every other tax authority at in the hierarchy right up to the CBDT. The recent compromises made by way of switch over to a sensible and saner attitude towards the sensitive class of taxpayers of all, namely, FIIs , FDIs, and of its kind, - either say, the ‘climb downs’  and ‘rollbacks’ even in respect of policy matters go to show that it is the carrot not a stick that would work, and prove an effective  way to handle.
Transfer Pricing is an area where the globally admitted /conceded fact is that it is founded on principles extremely unscientific, so much so entails aspects of potentially litigious nature. To be precise, the concepts of ‘related parties’  and ‘ arms length transactions’ AMENABLE TO NOT ONLY TWO VIEWS BUT MORE THAN TWO.
< to finish


MNCs look beyond India slowdown

Have committed themselves to investing Rs 1,85,000 cr since last year

looking beyond ......... how far ?

Vijay Iyer: Avoiding double trouble in transfer pricing

Most countries today target MNCs to help tax recoveries in their slow-moving economies, but only those tax regimes that offer policy certainty ...



cUSTOMS  V  i -tAX

FAQs on Custom Duty Valuation Laws in India

Impromptu >

May be, the write-up fairly sums up what are or should in the normal course of events be taken to be the answers to the addressed several FAQs. Nonetheless, one requires to keep in the backdrop a very crucial fact of life obtaining in the realm of administration of the law on customs duty; though not readily reconcilable with the norms or principles to be strictly followed. To briefly hint at, that is because of the two distinctly adopted and followed ‘philosophy’ , diagonally opposite to each other, by the customs authority on the one hand and the income-tax authority on the other. Both, invariably, at the starting point, proceed on the assumption, subject to a forceful rebuttal and satisfying proof, that there must have been ‘under invoicing’ by the supplier of ‘goods or ‘services’; but with totally opposite results/ duty or tax consequences. To be precise, the reference is to the TPR regulations in force and requiring be implementing / enforcing by the IT authorities.
One will find in public domain a plethora of usefully enlightening material for guidance, inter alia, in the form of settled disputes mostly abroad.


The well meaning, unbiased write-up supplies one more axe to chop off, or strike at the root, the unacceptably in equitable propaganda mooted by those few protagonists, including professionals, whether competent or suitably equipped or otherwise, against the courts’ rulings on the related propositions, exclusively of ‘law’. attempting to bypass or sidetrackthe reality that, such propositions are , by the very nature. essentially required to be adjudicated having regard to considerations such as, ‘constitutionality’, principles of natural justice, or the like; not on emotional or purely mundane considerations sans moral or ethical or utmost equitable grounds .


Oct. 3 



Recent developments appear to suggest that tax authorities are going beyond conventional approaches in assessing taxpayers.

‘Look at’ or ‘look through’?

Recent developments appear to suggest that tax authorities are going beyond conventional approaches in assessing taxpayers. »




presentation on Direct Tax Code 2010 - KPMG

319 Sections and 22 Schedules in DTC 2010 vis-ā-vis ... 5. Gain on transfer of Equity Shares / Units of. Equity Oriented Fund. DTC 2009. DTC 2010. LTCG

  < Based on random thoughts:

 "....The HC eventually held such a transfer of shares as transfer of a business that resulted in business income."

There could be no two opinions on, - (1) that the view the court has taken is nothing new but simply goes to emphasize and squarely endorses the stance taken/continue to be persisted in by the government in Vodafone and like cases; and (2) the points of controversy are certain to be kept alive, with no let-up, to the delight of vested interests of every kind- primarily ideologists cum activists and lawyers,- for say, a few more decades, if not to infinity.

As may have been noted, even the related /corresponding provisions of the DTC, pending enactment, do not hold any help or scope for any solution on such issues, in the foreseeable future. Be that as it could not have been expected to be otherwise, and without having a mind to get involved, at least for the nonce, in analyzing the merits of the views/counter views encountered, there is one essential aspect which most certainly has been pushed to the sidelines. That is, - on the premise that income arising/accruing in such cases has to be taxed under the head of "business", what then is to be deducted as "cost of acquisition", for arriving at the "profits and gains" - is it , simplistically, the "cost" historically incurred for acquiring the shares ; or should it be reckoned / computed differently ?

It is for those legal pundits at large, if fair-minded, to ponder, deliberate, and endeavor to provide a solemnly satisfactory and commonly acceptable answer, so as to leaving the least room for any genuine controversy!

and Do not the proposed related provisions in the DTC, if looked at or into, provide some helpful clues/cue , to embolden them to do so!


The  view the recent court verdict has brought to surface once again, if looked at or through, is to the following effect: The subject matter of transfer is really the intangible asset, dubbed as ‘controlling interest ‘. Pithily stated,  according to the thinking behind, what has been transferred by seller and bought by the purchaser should be taken as  a slice of the operating company’s net worth, i.e. proportionate assets minus liabilities as on the date of transfer.
The stated premise, if perceptively analyzed, as sufficiently canvassed in knowledgeable circles, goes against the very grain of the underlying scheme of the provisions of the law. Further, more importantly,  is seen  to give rise to a quandary; that can be illustrated as under:
Cost of acquisition of the shares (even if it be looked at or through as ‘controlling interest’/ a proportionate slice of the business) could not, by no means, be taken at no more or less than the price negotiated and actually /factually paid for. In case it were to be regarded as price paid for not the ‘Shares’  but the controlling interest / the slice of the business it represents , going by common sense and logical reasoning, on its transfer the seller has to be taken to have demanded and received, and the buyer has to be taken to have agreed and paid, such an amount as considered its fair market value or its intrinsic value.
In the nature of things, however, there could again be no denying that, the seller has been able to realize more than what he paid for, only because of the appreciation in the value of the “capital asset”. There could be no doubt that it is such appreciation in value which in tax parlance is referred to as/termed ‘cost of improvement’.

Now, if the foregoing is translated arithmetically:
Cost of acquisition (of controlling interest) being the cost/equivalent of the shareholding held – say. X
Sales price – say, Y
Cost of improvement (being excess of Y over X ) – i.e. Y-X
Cost + Improvement cost = X + (Y -X)
CG = Y – (X + (Y – X))
i.e. Y – X – Y + X
Is not the Result/can it be different than an absolute – ‘ZERO’?
Key Note:
The suggested line of reasoning, in one’s conviction, cannot be simply ignored as a puzzle requiring a mathematical genius to solve; much less, as fiendishly difficult to understand by anyone, even if endowed with an average IQ, hence deserves to be gone into in-depth. For, after all, the fact staring in the face is that the same line of reasoning, as is more than obvious, has been adopted in framing the corresponding provisions proposed in the DTC (pending enactment). Except that, the formula as framed therein for arriving at the taxable income , in one’s view, does not have any semblance of simplification sought to be accomplished , but suffers from certain other fallacies of a different kind. 
Is the comment  puzzling and open to any intelligent and well reasoned counterview?
If so, Readers remain to be enlightened.


Cross REfer>

Related Stories >

Why We Couldn’t Have Let Vodafone Get Away Without Paying Taxes: FM

Vodafone Verdict Is Wrong: Prashant Bhushan

Why the Vodafone Retrospective Law Will Ruin India: Harish Salve

Why Vodafone Retrospective Law Is Not Disrespect To Supreme Court: FM


Capital gains taxation for non-residents under DTC | Business Line

Capital gains taxation for non-residents under DTC. Share · print ·. T+ · T- ·

Capital gains taxation for non-residents under DTC

Jan 29, 2011 - Capital gains taxation for non-residents under DTC.T.C.A.RAMANUJAM.










Capital gains vs. interest

The characterisation of additional payments received as interest or capital gains has been a vexed issue. »

Recent Article in Taxation & Accountancy

In safe harbour, at long last

The Central Board of Direct Taxes recently issued final rules on transfer pricing »

<....The final rules were issued after considering stakeholder comments and addressing some of the concerns raised. The transfer price contained in the safe harbour rules will apply for five years from financial year 2012-13 and taxpayers may elect to be governed by the rules for all or any of the five years. >

<...However, taxpayers would need to separately evaluate the impact of such payments in computing book profits for Minimum Alternate Tax. >

<...While the protocol comes into force from April 2, 2013, the notification mentions various dates on which specific articles of the protocol would be effective in India. >

<....The contentious “software issue” is currently pending before the Supreme Court. >

<....While the term ‘exclusively’ is still open to interpretation and remains untested, the substantive conditions for claiming the exemption appear to have been simplified. The onus of claiming exemption continues to be on the SEZ unit/ developer. >

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