In the case Signon-Computer Services v. Assessment Office (Tax Appeals 1228/02) published on 14 November 2007, a District Court ruled against a dividend stripping transaction, which occurred before the enactment of "repairing" legislation by means of Sec. 94C of the Income Tax Ordinance (ITO) in 2003.
Before the enactment of Sec. 94C of the ITO, it was an established practice for Israeli companies to purchase shares in other Israeli companies with accumulated pro…