The Finance Minister, Mr Pranab Mukherjee, has clarified that there is no vindictive intention behind the move to retrospectively amending the Income-Tax Act.
He stressed that the Government does not plan to open a plethora of old cases by making such changes.
Addressing the national executive council meeting of the CII, Mr Mukherjee said, "I can assure the industry that there is no intention of opening a plethora of old cases on this plea or that plea because that is simply not permissible (under the laws)."
On industry apprehensions that all the cases could be reopened from the date of enactment of the Income-Tax Act, he replied in the negative.
"This amendment has been made not with any vindictive or with asserting any particular point of view. This is absolute requirement of the law....But at the same time, I shall have to protect myself. I am not holding my money. I am custodian of the money given by 120 crore people through taxation."
Mr Mukherjee’s proposal in the Budget to retrospectively amend the Income-Tax Act with effect from April, 1962, to tax deals involving overseas companies that have interests in India, has generated criticism with some suggesting that it would impact investments into the country.
He said that while the Supreme Court is ultimate interpreter of law, that does not take away the right of the legislators to express its intentions.
The move comes against the backdrop of the Supreme Court order that held that the $11-billion deal between British telecom giant Vodafone and Hong Kong-based Hutchison’s telecom business, involving India assets, was not liable to tax in this country. The apex court rejected the I-T department’s demand for Rs 10,000 crore tax on the deal.
The Finance Minister said the Budget move was not merely to prevent erosion of revenues in the present cases but also to check outgo of revenues in old cases. Pointing out that there had been hardly any Finance Bill that did not amend laws retrospectively, he said the proposed changes in tax laws are in line with the Supreme Court judgment to make intention of the legislators clear.
He said that within hours of Supreme Court dismissing the Centre’s review petition in the Vodafone case, he directed officials to return the money collected from the telecom company. The Government paid back Rs 2,500 crore along with 4 per cent interest to Vodafone on March 2.