The government on Tuesday said it was looking into at least four more cross-border mergers like Vodafone for a possible tax loss that may have taken place. The deals under scanner include GE Capital International Services, Intelnet Global Services, Sanofi-Shantha Biotechnics, and New Cingular Wireless Services Inc-AT&T Maritius’s deal for Idea Cellular.
“A few cases relating to cross-border merger and acquisition deals have been identified for further examination by the (Income Tax) department. These deals are being examined for possible tax implications,” finance minister Pranab Mukherjee told Parliament.
In the three-year old Vodafone tax case, the tax department has already slapped a tax bill of over Rs 11,000 crore on Vodafone for the Hutchison Essar deal. Vodafone denies any such capital gains tax liability. The dispute in the case was over the Indian tax department’s jurisdiction over the deal when the parties engaged in the deal may not be in India but the underlying assets may be in India.
Mukherjee said, as and when any tax evasion relating to mergers and acquisitions is detected, appropriate action is undertaken in accrodance with the provisions of the Income Tax Act
Cross-border deals that are under the scanner by the revenue authorities are deal of SKR BPO Sevices with Barclays Mauritius for Intelnet Global Services, transfer of stake in GE Capital International Services.
Another such deal where tax was to be paid were on transactions between Sanofi Pasteur, Merieux Alliance and Groupe Industriel Marcel Dassault for acquiring Shantha Biotechnics Ltd where the tax department has already raised a tax demand of Rs 648 crore. Sanofi did not deduct tax at source before making payment of Euro 55 million to Merieux Alliance and Groupe Industriel Marcel Dassault for acquiring Shantha Biotechnics. Further, the deal between New Cingular Wireless Services Inc and AT&T Maritius for Idea Cellular is also under the scanner. New Cingular Wireless and MMM Holding sold their shares to AT&T Cellular to Tata Industries for $150 million and no tax deduction at source was done by Tata Industries. Later the Indian company has paid Rs 45.50 crore towards tax to the department after they took up the case.