The Supreme Court is likely to hold a preliminary hearing in the landmark Vodafone International Holdings case on Monday next (September 27). British telecom operator Vodafone had on September 14 filed an appeal with the Supreme Court, after the Bombay High Court dismissed its petition and ruled that income-tax authorities had jurisdiction over the $11-billion Hutchison deal.
Vodafone contends that there is no tax to pay in India on the 2007 Hutchison transaction as the deal took place overseas. By ruling that Vodafone’s $11-billion acquisition of controlling interest in Hutch Essar constituted a “source of income in India”, the Bombay High Court has virtually said that the transaction is taxable in India, say tax experts.
The Bombay High Court ruling could have negative repercussions on all offshore deals with underlying Indian assets and discourage foreign investments, say some tax experts. However, the Central Board of Direct Taxes (CBDT) Chairman, Mr S.S.N.Moorthy, had recently said that the High Court ruling will not affect foreign investment flows into India.
