Kolkata-based McLeod Russel, the largest tea plantation company in the world is reportedly the first Indian corporate to challenge the government’s retrospective amendments to tax laws, which were proposed in the Annual Budget, 2012..Kolkata-based McLeod Russel, the largest tea plantation company in the world is reportedly the first Indian corporate to challenge the government’s retrospective amendments to tax laws, which were proposed in the Annual Budget, 2012..McLeod Russel has filed a writ petition in the Calcutta High Court challenging the constitutional validity of the retrospective amendments proposed in the income-tax laws in the Budget. These amendments would enable tax authorities to levy a tax on capital gains on past cross-border transactions. The Calcutta High Court has issued notice to the Government and the matter will be heard on July 10, 2012..The Kolkata office of Khaitan & Co is advising McLeod Russel on this case. Khaitan’s team, comprising of Partner Param Khaitan and Executive Director Ajoy Kumar Gupta, are the lead advisors..McLeod Russel’s dispute with the income tax authorities is with regard to its cross border deal in 2005. As per an ET report, in 2005, McLeod Russel acquired UK based Borelli Tea Holdings, which in turn held 74 percent stake in Williamson Tea Assam. The deal was struck for Rs. 165 crore..Later, in 2008, the Income Tax Department issued a show-cause notice for alleged failure to deduct TDS (tax deducted at source) followed by a demand order of around Rs. 50 crore..Mcleod Russel initially challenged the income tax proceedings at a lower appellate forum, namely the CIT or Commissioner of Income Tax (Appeals). The Calcutta High Court has stayed proceedings at CIT (Appeals) till August 31, 2012..Recently, UK’s Vodafone had won a five-year long legal battle against the Indian tax authorities. Indian tax authorities were trying to realize tax from Vodafone’s 2007 transaction where Hutchison Telecommunications sold its 67 percent stake in the Indian mobile service provider to the UK’s Vodafone Group Plc..In January, the Supreme Court held in favour of Vodafone, dismissing the tax demand and holding that the Government had no jurisdiction over Vodafone’s purchase as the transaction took place in Cayman Islands. The Court categorically ruled that Indian authorities have no jurisdiction over transactions which have taken place outside the country..However, the proposed retrospective amendments to the income-tax laws in the Budget 2012 has overturned the decision of the apex court verdict. Furthermore, the proposed amendments have led to uncertainty with regard to cross-border transactions involving indirect share transfers..At least 19 cases involving indirect share transfers, with a revenue implication of Rs. 40,000 crore, are pending disposal, as reported in the HinduBusinessline..McLeod Russel’s writ petition is an extremely interesting development, marking the beginning of a new legal battle against the retrospective amendments.
Kolkata-based McLeod Russel, the largest tea plantation company in the world is reportedly the first Indian corporate to challenge the government’s retrospective amendments to tax laws, which were proposed in the Annual Budget, 2012..Kolkata-based McLeod Russel, the largest tea plantation company in the world is reportedly the first Indian corporate to challenge the government’s retrospective amendments to tax laws, which were proposed in the Annual Budget, 2012..McLeod Russel has filed a writ petition in the Calcutta High Court challenging the constitutional validity of the retrospective amendments proposed in the income-tax laws in the Budget. These amendments would enable tax authorities to levy a tax on capital gains on past cross-border transactions. The Calcutta High Court has issued notice to the Government and the matter will be heard on July 10, 2012..The Kolkata office of Khaitan & Co is advising McLeod Russel on this case. Khaitan’s team, comprising of Partner Param Khaitan and Executive Director Ajoy Kumar Gupta, are the lead advisors..McLeod Russel’s dispute with the income tax authorities is with regard to its cross border deal in 2005. As per an ET report, in 2005, McLeod Russel acquired UK based Borelli Tea Holdings, which in turn held 74 percent stake in Williamson Tea Assam. The deal was struck for Rs. 165 crore..Later, in 2008, the Income Tax Department issued a show-cause notice for alleged failure to deduct TDS (tax deducted at source) followed by a demand order of around Rs. 50 crore..Mcleod Russel initially challenged the income tax proceedings at a lower appellate forum, namely the CIT or Commissioner of Income Tax (Appeals). The Calcutta High Court has stayed proceedings at CIT (Appeals) till August 31, 2012..Recently, UK’s Vodafone had won a five-year long legal battle against the Indian tax authorities. Indian tax authorities were trying to realize tax from Vodafone’s 2007 transaction where Hutchison Telecommunications sold its 67 percent stake in the Indian mobile service provider to the UK’s Vodafone Group Plc..In January, the Supreme Court held in favour of Vodafone, dismissing the tax demand and holding that the Government had no jurisdiction over Vodafone’s purchase as the transaction took place in Cayman Islands. The Court categorically ruled that Indian authorities have no jurisdiction over transactions which have taken place outside the country..However, the proposed retrospective amendments to the income-tax laws in the Budget 2012 has overturned the decision of the apex court verdict. Furthermore, the proposed amendments have led to uncertainty with regard to cross-border transactions involving indirect share transfers..At least 19 cases involving indirect share transfers, with a revenue implication of Rs. 40,000 crore, are pending disposal, as reported in the HinduBusinessline..McLeod Russel’s writ petition is an extremely interesting development, marking the beginning of a new legal battle against the retrospective amendments.