First Landmark Ruling On Indian Indirect Transfer Taxes!

Delhi High Court restricts their applicability

• The Delhi High Court upholds the non-taxability of gains from sale of shares of overseas entities by the Copal Group to the Moody's Group.
• Interpretation of the indirect transfer tax provisions in a restrictive manner.
• 50% threshold for substantiality based on guidance by OECD/ UN material and Shome Committee Report and DTC, 2010.

Earlier this week, the Delhi High Court came out with the first High Court ruling on the indirect transfer tax provisions, in DIT v. Copal Research Mauritius Limited, Moody's Analytics, USA & Ors.¹ These tax provisions have long plagued the international investor community, particularly cross border M&A, and it was hoped that they would be removed/ clarified by the Modi government's recent maiden budget.²