ITO vs. Tata Industries Ltd : A payer cannot be treated as in default for not deducting tax based on subsequent retrospective indirect transfer tax amendments.

12. [2026] 185 taxmann.com 924 (Mumbai - Trib.)

ITO vs. Tata Industries Ltd

A.Y.: 2006-07 Dated: 15.04.2026

Section 9, 195 and 201 of IT Act, 1961 – The Assessee cannot be treated as an ‘assessee in default’ in respect of payment of consideration to US entities for the acquisition of shares of a foreign company based on the subsequent retrospective insertion of indirect transfer tax provisions in the Act.

FACTS

The Assessee paid a consideration of USD 150 million to two US entities, namely, New Cingular Wireless Services Inc (NCWSI) and MMM Holdings Inc (MHC), for acquiring shares in a Mauritius entity. The Mauritius entity held a stake in an Indian entity, i.e., Idea Cellular Ltd. The Assessing Officer (‘AO’) examined the holding structure & transaction documents and concluded that the acquisition of shares in a Mauritius entity resulted in an indirect transfer of shares in the hands of two US entities. Hence, the AO observed that the Assessee was obliged to deduct taxes at source. In the absence of further information from the Assessee, the AO determined the capital gains on a best-effort basis and treated the taxpayer as an ‘assessee in default’ for failing t