Caselaws

It brought following amendments:-

1. Change in the definition of Capital Asset

2. Change in definition of 'Transfer'

It had effect of inposing capital gain tax, on transfer of shares of one foreign company to another foreign company outside India if the transferor foreign company derives substancial  value for its shares from assets situated in India.

For details please refer this

https://www.mayurbatra.com/en/vodae.pdf

Hutchison Essar is an Indian Company, the controlling interest of Hutchison Essar is held by a SPV of Cayman Island (CGP Investments Holding Ltd.). CGP is owned by Hutchison Telecommunications International Ltd (HTIL), Hongkong. In this manner the controlling interest of Hutchison Essar is held by HTIL, Hongkong through an intermediary Cayman Island company (CGP). Vodafone International Holdings, Netherland entered into an agreement with HTIL, Hongkong to buy the shares of CGP (Cayman Island). Since CGP is holding directly and indirectly 67% shares of Hutchison Essar (India), the above transaction results in transfer of shares and controlling interest of Hutchison Essar(India) from HTIL, Hongkong to Vodafone International Holding, Netherland. The consideration for transfer is stated to be USD 11.1 Billion.

This case will not only change finance act, but to a large extent our country's foreign policy as well.