Competitive Exams: Current Affairs 2012: Vodafone Case
The demand for tax in the Vodafone case was a result of failing to understand the difference between the sale of shares in a company and the sale of assets of that company. It is an elementary principle of company law that ownership of shares in a company does not mean ownership of the assets of the company.
The assets belong to that company which is a separate legal entity.
The transfer of shares of one non-resident company (Hutchison) to another non-resident company (Vodafone) did not result in the transfer of any asset of HEL in India.
Under Section 9 − 1 − i of our Act, there is liability to tax only if there is a transfer of a capital asset in India.
Courtesy: The Hindu