Shome Committee Report on Retrospective Amendments - Government Calls for Comments
THE Parthasarathi Shome Committee has submitted its draft report on Retrospective Amendments Relating to Indirect Transfer. The Committee has recommended that the provisions introduced in 2012 Finance Act should be applied prospectively. This would better reflect the principles of equity and probity in the formulation and implementation of commonly recognized taxation principles.
In case the Government opts for retrospective taxation of indirect transfer, the Committee recommends:
(i) No person should be treated as an assessee in default under section 201 of the Act read with section 9(1)(i) of the Act as amended by the Finance Act, 2012, or as a representative assessee of a non-resident, in respect of a transaction of transfer of shares of a foreign company having underlying assets in India as this would amount to the imposition of a burden of impossibility of performance. This would imply that Government could apply the provisions only to the taxpayer who earned capital gains from indirect transfer.
(ii) In all cases where demand of tax is raised on account of the retrospective amendment relating to indirect transfer u/s 9(1)(i) of the Act, no interest under section 234A, 234B, 234C and 201(1A) of the Act should be charged in respect of that demand so that there is no undue hardship caused to the taxpayer. Moreover, in such cases, no penalty should be levied in respect of the income brought to tax on application of retrospective amendments under section 271(1)(c) (for concealment of income) and 271C (for failure to deduct tax at source) of the Act.
Comments and suggestions on the draft report can be sent by 19th October 2012 at the email address (jstpl2@nic.in) or by post at the following address with "comments on Expert Committee Report on Retrospective Amendments" written on the envelope.
Joint Secretary, (Tax Policy & Legislation-II), CBDT, Department of Revenue, Room No.147-C, 1st Floor, North Block, New Delhi -110001