Vodafone’s senior counsel, Harish Salve, today began arguments on behalf of the company on its plea against the income tax department in the Hutchison case. The arguments could continue for some weeks. The company had moved court on a show cause notice from the I-T Department, quantifying a tax liability of Rs 12,000 crore (Rs 120 billion), which could include a penalty, on account of Vodafone not deducting tax from the payment made to Hutchison for acquiring the latter’s stake in an Indian telecom venture.
Vodafone had paid $11.2 billion to acquire Hutch’s 67 per cent stake in Hutchison Essar and the revenue authority demanded payment of capital gains tax.
Salve told a bench of judges D Y Chandrachud and J V Devadhar, that the transaction was done abroad, involved foreign companies and, hence, was not liable for tax.
The company questioned whether Indian tax authorities had the jurisdiction to seek to tax for the transfer of the shareholding in an overseas company between two non-resident companies.
“No asset in India has been transferred. What has moved is the consequence of the extent of transfer of shares. Vodafone has acquired shares and has not made any money from this transaction. Hence, it is not liable for tax,” Salve told the court.
Vodafone’s counsel said it was common practice for companies to utilize favorable tax regimes of countries like the Bahamas, especially in deals like mergers and acquisitions.
This is not the first time this case has been heard in court. Last year, Vodafone appealed the Supreme Court, which passed an order quashing its plea, but asked the Central Board of Direct Taxes to look into the matter.
After this, CBDT had issued a show cause notice to Vodafone. The company made a detailed response, but the revenue authority sent a notice claiming tax on the deal.
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Income Tax department of CBDT should first clean their own house in the country. Why tax payers’ money is being misused? Do you have any control on this? Can you sue a minister? My answer is a big NO. Everyone knows that, what kind of corruption is in practice. I have not got my refund for many years and have been hunting for the same but none of the IT officials are bothered as they are always busy in some or other things favouring them. Anyone in CBDT hearing my plea to do something for my refund ??????