This refers to Minati Roy's letter "Tax laws and judgments" (November 4) raising certain issues on the Vodafone tax case. In my opinion, the Income Tax Act, 1961, is one of the simplest and most explicit tax laws in the world. Its beauty is that it has a remedy for most problems. If a taxpayer is taxed heavily and a demand is raise that is considered unlawful, one can file an appeal before the Commissioner of Income-tax (Appeals) and then the Income Tax Appellate Tribunal.
The Income Tax Act, however, is not supposed to have an answer for every problem that arises due to sophisticated economic crimes or complicated tax planning. The Vodafone case was a rare exception where, according to the Supreme Court, the shares bought or sold were not taxable because they were not present in India. According to experts, shares represent assets, and the assets were lying in India. Hence, the shares were taxable under the Income Tax Act. Parliament passed a law approving retrospective amendment of the Act. The matter ends there. Vodafone is liable to make the payment. However, as far as the interest and penalty is concerned, the company should approach the Commissioner who has unlimited power of waiver of penalty and interest. We should not blame the Income Tax Act.
S C Aggarwal New Delhi
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