CAPITAL GAINS TAX- A CRITICAL ANALYSIS OF VODAFONE’S CASE
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https://doi.org/10.55662/Abstract
Article 265 of the Indian Constitution provides: “No tax shall be levied or collected except by authority of law”. Any compulsory exaction of money by Government amounts to imposition of tax (basically imposed for public purpose for raising the general revenue of the State) which is not permissible except by or under the authority of a statutory provision. The effectiveness of Taxing Statues depends on the means through which interpretation is shrewdly adopted as it imposes unique confrontations to legal interpretations and its technicalities aren’t an easy breakthrough.
The Vodafone case had been shrouded in uncertainty till 2012.The tale began as early in February 2007 when Vodafone International Holdings (hereinafter Vodafone or VIH), a Dutch entity, had acquired 100 percent shares in CGP (Holdings) Limited (hereinafter CGP), a Cayman Islands company for USD 11.1 billion from Hutchinson Telecommunications International Limited (hereinafter HTIL). A dramatic turn of events after sometime led to legal battle between the Indian Income Tax Department on the one side and Vodafone on the other for the astronomical figure in question: Rs. 12, 000 Crores which raised the eyebrows of many business and legal circles in India.
There wasn’t any case of much gravity before Vodafone pertaining to Tax dispute in India. In this connection, the author would firstly elaborately discuss the meaning and origin of ‘Capital Gains Tax’ (hereinafter CGT) and its relevancy to Vodafone. Secondly, the author would also compare the various provisions of CGT (Sections 45-55A) under the “Income Tax Act, 1961” (hereinafter IT Act) by exploring its applicability and intricacies and bringing into limelight the numerous loopholes in Vodafone with respect to CGT. Since Vodafone is a case of much magnitude from the viewpoint of Corporate Law, Investment Arbitration and Tax Law, the author would additionally focus on these wide interpretations and perspectives on Vodafone.
The last leg of this paper would deal with suitable remedies and suggestions for the better application and implementation of CGT under Tax laws and amendments or new incorporations to the relevant provisions of CGT under IT Act if necessary.
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