Vodafone gets relief from I-T claim till next hearing

MUMBAI: The income-tax department told the Bombay High Court on Tuesday that it will not seek recovery of around $2 billion in tax, which it claims is payable by Vodafone, the UK-based telecom company, till the case is again heard in July. The court admitted Vodafone’s appeal that challenged an order of the I-T department, levying tax on the telecom company’s $11-billion acquisition of Hutchison Essar three years ago. A division bench of Justices Dhananjay Chandrachud and JP Devadhar will hear the case again on July 8.

On May 31, the revenue authorities held that it had the jurisdiction to tax Vodafone’s acquisition of Hutchison Essar in 2007. The tax liability of Vodafone is around Rs 12,000 crore, according to tax authorities. The I-T department claims that Hong Kong-based Hutchison International made capital gains by selling two-third of its stake in its Indian arm and Vodafone should have deducted tax when it executed the deal, the department reasoned.

In a media statement on Tuesday, Vodafone said the company remains fully confident that no tax is payable.