Friday, June 5, 2015

2015 "Vodafone Amendments" - Sec 9 (1) (i)

RANDOM (unedited) >

OWN THOUGHTS (sharing, with the sole aim of provoking more purposeful thoughts, for truthfully serving “the common good”):

In one’s independent but unbiased forthright view, should the so called “Vodafone amendments” be studied closely and mindfully, the impression sought to be conveyed appears to gravely suffer from the malady of faulty thinking and misconceived reasoning; in that, if critically analysed, in describing the fiction embodied therein cannot be righteously called a ‘legal fiction’. At best, it is a ‘fiction’, rather a combination of fictions rolled into one; but does not deserve to be prefixed with ‘legal’. Further, there seems to be no validity or courage of convection in trying and propagating anyone’s own observations / view to the effect that , by and large, - “ the Government is in the process of taking several measures to boost up investor confidence and this is one of the right steps”. Or as brought out elsewhere in like vein , in certain other articles in public domain; e.g.

Anyone concerned, in particular as tax payer or its advising law expert, will do well, in the larger interests of one and all concerned, including the FM, to consider, AMONG OTHERS, the frightfully so-obvious features:

1. The subject amendments are specified to have been made effective from April 1, 2016, applicable for and from the assessment year 2016-17. In doing so, what has been pathetically over sighted is that the amendments made are prima facie incomplete; hence to way to give effect, unless and until such time some of the vital facets left uncovered come to be covered in the to-be-framed rules.

Extract from the Text of the Explanatory memorandum, under “D . EASE OF DOING BUSINESS / DISPUTE RESOLUTION”-
(v) the manner of determination of fair market value of the Indian assets vis-a vis global assets of the foreign company SHALL BE PRESCRIBED IN THE RULES.

(vi) the taxation of gains arising on transfer of a share or interest deriving, directly or indirectly, its value substantially from assets located in India will be on proportional basis. The method for determination of proportionality ARE PROPOSED TO BE PROVIDED IN THE RULES.

As such, as of date, it is not but quite unclear how taxpayer is expected to venture and embark on even a tentative exercise of ascertaining what exactly is going to be the impact for purposes such as, TDS, Advance tax, so on, in respect of any transaction already concluded or intended to be concluded within the current ‘previous year’ that commenced on April 1, 2015.

2. On merits or otherwise of the underlying implications, it is strongly felt that, the deficiencies/likely areas of genuine controversies galore are more or less similar to the once proposed provisions in the DTC, but since shelved ,- rightly done so.
Those may be found covered in the viewpoints shared through personal Blogs; e.g. HERE…/ghost-of-vodafo…

Also through the comments posted @

Explanation 5 to Section 9(1)(i) – “Substantial ... - TaxGuru

KEY NOTE: Another the most important aspect of all, but not seen to have been made even a remote reference of, - is the implications of the applicable tax treaty provisions; for, as per tentative thinking, the so called ‘legal fiction’ is likely to be inconsistent with , and fly in the face of the internationally accepted/acceptable philosophy as underlined therein.

To give a hint, may have a look at the expert commentary, albeit in brief, in the TENTH EDITION of the leading Text Book (Kanga &Palkhivala), Vol I, on the topics of “Form vs Substance” and on the 2012 amendments of Sec 9 (1) (i) itself.

Vodafone amendment logically completed in Budget 2015 |

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