Vodafone India Hutch Acquisition Taxation Fiasco

mobiler0

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NEW DELHI: With the Income Tax Authorities raising a demand for Rs 12,000 crore tax, telecom giant Vodafone on Saturday asserted that no tax was payable on the USD 11.1 billion deal it did with Hutchison in 2007.

The mobile operator also said it is considering to appeal to the Bombay High Court to legally challenge the claims of the IT department.

The Income Tax department on Friday had asked Vodafone to explain why it should not be taxed Rs 12,000 crore for its USD 11.1 billion deal with Hong Kong-based Hutchison in 2007 for acquiring its assets (majority stake) in the Indian joint venture with Essar.

"Vodafone is considering its next move, which includes an appeal to the Bombay High Court -- as per the Supreme Court's decision -- to legally challenge the validity of the order on the preliminary issue of jurisdiction," Vodafone said.

The tax authorities had called Vodafone for a hearing on June 14, 2010, to discuss the potential quantification of any tax on the Hutchison acquisition.

"Whilst an amount of tax has been suggested by the tax authorities, it is important to note that this is not a demand for payment... Vodafone remains confident that there is no tax to pay on this transaction," it added.

The dispute concerns Vodafone Group Plc's acquisition of a 67 per cent stake in Hutchison Essar from Hong Kong's Hutchison Telecommunications International Ltd. The I-T department is of the opinion that the transaction is taxable in the country.

Earlier, Vodafone had also approached the Supreme Court, which had refused to intervene in the tax dispute between the telecom firm and the I-T department and had asked the department to check whether it has the jurisdiction to proceed further in the tax case.

Vodafone had paid USD 11.1 billion for Hutchison's 67 per cent stake in Hutchison-Essar (since renamed Vodafone Essar) in 2007.

The government approved the deal in May, 2007, itself. After regulatory clearances were given, the tax department issued a show-cause notice to Vodafone saying the company did not deduct tax, estimated at around USD 2 billion.

In 2007, Vodafone received a show-cause notice asking why it had not done this. Following this, the company approached the Bombay High Court.

After the high court dismissed Vodafone's petition challenging the I-T department's notice, the company moved the Supreme Court in January, 2009.

The Supreme Court granted Vodafone the right of appeal to the Bombay High Court if it disagreed with the tax authorities' determination.

MORE INFO - Vodafone to appeal I-T dept's Rs 12,000 cr tax demand-Telecom-News By Industry-News-The Economic Times
 
B

brickhouse

wow so IT want $2b in tax from VODAFONE for buying a companyIndian LAW is so full of shit
 


W

warthog

wow so IT want $2b in tax from VODAFONE for buying a company

Indian LAW is so full of shit

no its not that full of shit.tell me that if a company like hutch who is operating in india is bought by another company and to prevent giving tax they have the contract in caymen islands(tax heaven just like swiss).I have given tax exams and not only should vodafone givr the tax as the income derived is from india and it is located party or wholly in india but the govt should fine vodafone 1$ billion more for doing tax evasion.
 

Sushubh

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Oct 29, 2004
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India's highest court Friday gave Vodafone Group PLC investors a multi-billion dollar reason to celebrate, ruling that the country's authorities do not have the right to tax its $11.2 billion purchase of a majority stake in Hutchison Essar Ltd. in 2007.

The decision could result in Vodafone being able to avoid handing over around $2.2 billion in taxes, which it says it shouldn't have to pay because the deal was conducted overseas.

India's tax authorities can file for a review of the ruling, but it isn't clear yet whether they will choose to do so.

Vodafone Wins India Tax Case — online.wsj.com — Readability
 

real_india

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Nov 30, 2005
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I don't think they will file for a review. It was a unanimous decision. I knew it was going to happen all along! Govt was trying to be greedy, finding ingenious ways to reduce the budget deficit.
 


IndianMascot

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Jun 17, 2011
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The Supreme Court today dismissed Government’s plea seeking review of its verdict which held that Income Tax Department does not have jurisdiction to levy Rs. 11,000 crore as tax on the overseas deal between Vodafone International Holdings and Hutchison Group.

A bench comprising Chief Justice S. H. Kapadia and Justice K. S. Radhakrishnan dismissed the Centre’s review petition in the Vodafone tax case during an in-chamber proceeding.

The Hindu : Business News : Supreme Court dismisses govt.
 

IndianMascot

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Jun 17, 2011
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Yep, today evening saw on CNBC Awaaz that Govt gonna ask Vodafone again to pay the taxes after Finance Bill is passed in June.