The court dismissed the tax department’s case against the Authority for Advance Ruling’s (AAR) decision to consider an application from Sanofi, a global pharmaceutical company, regarding a 2010 deal.
Sanofi had approached the AAR to determine how its purchase of Shantha Biotech should be treated for tax.
The decision paves the way for a ruling from the AAR, which has already heard arguments from the company and the tax department.
Sanofi paid Rs3,700 crore ($82 million) to France’s Merieux Alliance for the Indian vaccine maker. The tax department demanded Sanofi pay Rs650 crore as capital gains for the transaction.
Officials claimed that Sanofi was taxable under section 195 of the Income Tax Act because Shantha was an Indian asset.
However, Sanofi maintained that it is not liable for capital gains since the deal, which was done through a special purpose vehicle incorporated in France by Merieux, took place outside of India.
More to follow...
