The finance ministry today once again tried to allay fears of the industry, saying cases over six years old could not be reopened for tax purposes. India Inc is jittery over the proposed amendment to the Income Tax Act with retrospective effect from 1962, to bring the Vodafone-Hutchison deal and similar transactions under the tax net.
Finance Minister Pranab Mukherjee said, “We are not going to reopen cases from 1962. Please remember this is the legal requirement — when we interpret something and if legislation says this is my intention, it goes back to the date it was originally enacted. But, there is also another provision in the Income Tax Act that says we cannot reopen cases beyond six years. We are not going to reopen cases from 1962.”
He assured the industry there would be no unfair treatment. He clarified a Budget proposal to allow tax authorities to reopen 16-year-old cases from the current limit of six years did not relate to the Vodafone kind of cases. That proposal related to assets held abroad, he said.