The government’s tax wing has approached the Supreme Court challenging a Delhi high court verdict ruling that the overseas share sale transactions by foreign companies would be taxable in India only if their Indian assets exceeded 50% of their total value.

On 14 August 2014, a two-judge bench of the Delhi high court had rejected the revenue department’s contention that share sale transaction between the Copal Group and the Moody group was structured in a way so as to avoid tax.

The high court said that for an overseas transaction to be taxed in India, a majority of the value of the overseas entity had to be derived from its Indian assets.

The case, which is now in the Supreme Court, is one of the legacy issues that the Bharatiya Janata Party-led National Democratic Alliance has inherited from the earlier administration.