Retrospective tax loses sting; CBDT panel receives no fresh case
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"No case has been referred to the panel so far," a senior finance ministry official told ET, adding that the legacy cases will be sorted out over a period of time through a legal process.
There are only 16-17 cases and not nearly 35 as estimated earlier.
The recent income tax notice to Cairn Plc had raised fears that more cases will tumble out, which could have undermined the Narendra Modi government's attempts to revive investment sentiment. The previous UPA government had introduced the much-criticised retrospective amendment to the Income-Tax Act 1961 to negate a Supreme Court ruling in favour of Vodafone after I-T authorities made a significant tax claim on its 2007 deal with Hutchison Whampoa to buy majority stake in its Indian subsidiary. Finance minister Arun Jaitley had promised during his first budget speech in July last year that no fresh action would be initiated under the 2012 amendment to tax indirect transfers and incometax assessing officers would have to send a reference to the high-level panel in CBDT before initiating action in any new case.
The hard talk seems to have sent the right signal to assessing officers. The official said the Central Board of Direct Taxes had received only one request that its case be referred to the panel.
This was the Cairns case, but that could not be considered by the panel as it was already in litigation and did not fall in the cate gory of a fresh case. Income-tax authorities had raised tax demand on the UK-based Cairn Energy Plc and Cairn India, owned by Vedanta group now, in March in respect of transfer of India assets to the newly set up Cairn India. Both Vedanta and Cairn Energy have issued notices to the Indian government under the UK-India bilateral investment promotion agreement.
The official said that out of the 16 cases on indirect transfers, demand orders are yet to be issued in the case of two transactions, playing down the contention that more cases could tumble out, hurting the country's efforts to rebuild its image as a favourable investment destination.
"There are not many cases...in most such cases notices have already been issued," the official said. Industry apprehends that cases could tumble out as the amendment has not been repealed and tax officials in the field would be bound to use it to initiate action in such cases. (Times of India)
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