www.WirelessFederation.com/news: India’s second largest operator by subscriber, Vodafone has filed a petition in the Bombay High Court to challenge the Indian Income-Tax department’s claim that it has jurisdiction to levy tax on Vodafone’s $11-billion acquisition of Indian company Hutchison Essar three years ago.
The disputed tax payable in India amounts to over Rs 12,000 crore. The matter is expected to be heard by a division bench of the high court, comprising Justice D Y Chandrachud and J P Devadhar on Tuesday. The tax war was ignited after a show cause notice was sent to Vodafone’s Netherlands office, asking it to explain why tax was not deducted, as it paid $11 billion to Hutchison International, Hong Kong to acquire Indian company Hutch- Essar.
The Indian I-T department has claimed that India has the right to claim tax on the profit generated in India, even if the sale of shares of the Indian company took place outside India. The High Court was moved by Vodafone last year to challenge the jurisdiction of the I-T department to levy tax on the transaction that took place outside India between two overseas parties. As per the company, all transactions related to the sale of shares took place outside India and therefore Indian tax regime has no right to levy tax on the transaction.
Failing to get any support from the High Court, Vodafone moved the Supreme Court which had asked the company to return to the I-T department to sort out the issue of tax jurisdiction. Vodafone got liberty from SC to move the High Court directly, bypassing the lower appellate forum, if it disagrees with the I-T order.
An order was again issued by the I-T department on May 31 reiterating its original stand. This is the second time Vodafone is moving the high court on the same issue.