Case Law Details
Nestle SA Vs ACIT (Delhi High Court)
Introduction: The Delhi High Court, in the case of Nestle SA vs ACIT, addressed a crucial matter regarding the tax implications of Nestle’s investment in shares of its Indian subsidiary. The court’s ruling sheds light on whether such investments can be treated as ‘income’ or fall under the category of ‘capital account transactions.’
Detailed Analysis: Nestle SA, a Swiss company, challenged a notice issued by the Assistant Commissioner of Income Tax, alleging that income had escaped assessment for the Assessment Year 2011-12. Nestle argued that its investment in shares of Nestle India should be considered a “capital account transaction” rather than income.
The petitioner highlighted its global standing as the largest food and beverage company, emphasizing its substantial revenues and profits. During the said assessment year, Nestle received dividends and interest from its Indian subsidiary, on which tax was duly deducted at source.
The court delved into the details of Nestle’s share purchase in Nestle India during the same period, emphasizing compliance with SEBI regulations and RBI approval. The petitioner contended that the transaction was in line with foreign investment and foreign exchange regulations.
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