In this article I will try to analyze the Vodafone case in terms of capital gains. Comparing the Sanofi case with the Vodafone case one wonders why Sanofi was not taxable compared to Vodafone. The answer to this question is quite simple as when accounting for a taxable company you need to consider both the taxability and the intention of the transaction. The main issue before the Court in the Vodafone case concerned the taxability of capital gains between two foreign companies on a foreign transaction plan. The Supreme Court in this particular case deals with the absurdity of the government's demand for taxes. There is no similarity between selling assets and selling shares of a company. Therefore, when a company has ownership of the shares of a company, it does not mean that the same company will also have ownership of the assets of that company. Under Section 9 (1) (i) of the Income Tax Act, 1961 it is clearly stated that the liability to pay tax will arise only in case of transfer of a capital asset in India. Suppose a Hyundai company operating i...