In a significant legal victory, the Delhi High Court has halted the reassessment proceedings initiated against a non-resident private equity (PE) investor. The case revolves around the source and valuation of investments made by the investor in Indian entities in 2019.
The investor, PE Creations, challenged the tax authority's notices, contending that the investments should be treated as capital transactions and not taxable income in India.
The court's decision to grant a stay on the proceedings is a significant development in this case. It has the potential to set a precedent for similar instances where non-resident investors face similar inquiries from tax authorities.
It is crucial for tax authorities to exercise caution and ensure fairness when conducting such investigations, as they could have a detrimental impact on foreign investment in India. Roving inquiries should be supported by thorough analysis and appropriate documentation to maintain transparency and clarity.
Stay tuned for further updates on this case, as the next hearing is scheduled for December 2023.
Source: ET