Hutch deal not taxable in India, says Vodafone in Bombay HC
Telecom major Vodafone on Monday squarely denied any liability for the capital gains tax arising out of its acquisition of Hutch shares.
By PTI |
MUMBAI: Telecom major Vodafone on Monday squarely denied any liability for the capital gains tax arising out of its acquisition of Hutch shares, saying that a share purchase deal between two foreign companies was not taxable in India.
Vodafone, which picked up the stake of Hutchisson in Hutchisson-Essar to form the Vodafone-Essar in USD 11.2 billion deal, is contesting Income Tax department's notice for capital gains tax to the tune of around USD 2 billion.
The final hearing on Vodafone's petition started before the Bombay High Court today.
Arguing for Vodafone, senior counsel Iqbal Chagla termed the case as a "pathbreaking matter", saying that for the first time IT Dept is seeking to collect tax in this way.
Chagla said that while Vodafone is a Dutch company, Hutchisson is incorporated in Cayman Islands. Income Tax act does not apply in such a situation, he said.
Secondly, he argued, a share-purchase did not amount to transfer of capital assets.
Department is holding Vodafone liable because it expected Vodafone to deduct capital gains tax while making payment to Hutchisson. But Chagla argued that since the entire deal occurred on foreign soil, if Vodafone were to shell out the tax, there was no way it could recover it from Hutch, which was the seller.
"No notice was ever sent to Hutch," Chagla said.
Vodafone, which picked up the stake of Hutchisson in Hutchisson-Essar to form the Vodafone-Essar in USD 11.2 billion deal, is contesting Income Tax department's notice for capital gains tax to the tune of around USD 2 billion.
The final hearing on Vodafone's petition started before the Bombay High Court today.
Arguing for Vodafone, senior counsel Iqbal Chagla termed the case as a "pathbreaking matter", saying that for the first time IT Dept is seeking to collect tax in this way.
Chagla said that while Vodafone is a Dutch company, Hutchisson is incorporated in Cayman Islands. Income Tax act does not apply in such a situation, he said.
Secondly, he argued, a share-purchase did not amount to transfer of capital assets.
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Department is holding Vodafone liable because it expected Vodafone to deduct capital gains tax while making payment to Hutchisson. But Chagla argued that since the entire deal occurred on foreign soil, if Vodafone were to shell out the tax, there was no way it could recover it from Hutch, which was the seller.
"No notice was ever sent to Hutch," Chagla said.
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