Judicial decisions in the recent past have emphasised the need for substance over form and careful consideration of tax treaties, feels Supreme Court Justice R. Mahadevan.

The apex court in its latest verdict ensured that the companies and organisations based in foreign lands do not violate the provisions of international treaties for personal benefits, such as avoidance of tax instead of genuine investment, he observed.

Justice Mahadevan was speaking at a seminar, “Evolving Landscape of Taxation, Litigation, and Regulatory Framework in India”, organised by the Income Tax Bar Association, Calcutta.

In January, a bench comprising Justice J.B. Pardiwala and Justice Mahadevan delivered a landmark judgment on an international tax treaty, involving investment firm Tiger Global’s stake sale in e-commerce major Flipkart to US retail giant Walmart.

“Direct taxation in India stands at the crossroads,” Justice Mahadevan noted, adding that legislative agility, judicial wisdom and administrative efficiency must converge for a tax ecosystem that is fair, certain and growth-oriented.

He observed that globalisation, digital commerce and cross-border transactions are challenging tax concepts such as territoriality and permanent establishments. In recent years, India moved towards a digital economy with the introduction of UPI, e-commerce platforms and start-ups.

With such developments, the landscape of direct taxation has changed. India also responded to the global and domestic imperatives with the introduction of digital economy taxation, GAAR and international taxation.

The seminar was also addressed by Justice C.V. Bhadang, president of the Income Tax Appellate Tribunal, who warned about the overdependence of artificial intelligence in the legislative process.

D.R.L Reddy, vice-president of ITAT, Calcutta zone, said a new building of the tribunal will be ready later this year. The seminar was also addressed by S.K. Tulsiyan, president of ITBA.