Vodafone files another petition in the Bombay HC against new move by IT dept

October 18, 2010 There seems to be no end to the troubles that are facing Vodafone. After its petition was rejected by the Bombay High Court in September questioning the jurisdiction of the IT department in the ongoing tax battle, the Supreme Court refused to stay the Bombay HC’s order.

The British mobile services giant had purchased 52 percent of Hutchinson's stake in Hutchinson Essar for USD10.9 billion in 2007. One of the biggest deals in mobile telephony, it set a precedent for cross-border transactions in India. The IT department had issued a notice relating to the tax owed to them in the purchase to Vodafone for a whopping USD2.6 billion. The tax department had alleged that since Hutchison made capital gains in the sale transaction, Vodafone should have deducted tax on it.

The IT department had sent a notice to the company in May and in that notice had qualified Vodafone as an agent of Hutchison. It is widely believed that since the IT department cannot take any action against Hutchison since it has no presence in India, it is taking this new route to recover taxes from the company.

Read more at www.barandbench.com.

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