This article invokes the Territoriality Clause (article 245) of the Indian Constitution and argues that the the Territoriality Clause is a substantial limitation on the Indian Parliament's power to impose capital gains taxation on offshore transactions. The important point is not the location of the underlying assets held by a foreign/offshore corporation (as was argued by the Income Tax Department in the famous Vodafone International Holdings v. Union of India [2012] before the Supreme Court of India) but the identity of the parties engaged in that transaction.