No tax liability in India over deal with Hutchison: Vodafone
Telecom major Vodafone today said it is not liable to pay any tax in India on the USD 11.1 billion deal it signed with Hutchison International in 2007, a position contrary to the contention of the revenue department.business Updated: Jul 30, 2010 01:26 IST
Telecom major Vodafone on Thursday said it is not liable to pay any tax in India on the USD 11.1 billion deal it signed with Hutchison International in 2007, a position contrary to the contention of the revenue department.
"We continue to be convinced and advised that no tax is due, we have made an acquisition in this country, we have not sold assets," Vodafone-Essar CEO Vittorio Colao told reporters here.
Colao further said he has confidence in the Indian legal system and would continue to contest this matter in courts.
"We have invested lot of money. We have confidence in the court process. India has a very solid legal system and we will just go on and on until our reasons are heard," Colao added.
Earlier this month, the Bombay High Court deferred till August 2 the hearing on an appeal filed by Vodafone International challenging income tax department's decision to levy tax on the company for acquiring stake of Hutchison International in Hutchison-Essar in a USD 11.1 billion deal in February 2007.
On May 31, the court had stayed the ruling of I-T department which held that it had the jurisdiction to tax the transaction. The tax liability could go up to around USD 2 billion.
The tax department's contention is that Hutchison made capital gains in the deal, and while paying the purchase amount to Hutchison, Vodafone should have deducted tax on it.
The department first issued show cause notice to Vodafone in 2007, which it challenged before the Bombay high court. After the court dismissed Vodafone's petition, it went to the apex court in January 2009.
The Supreme Court sent the case back to I-T department, to decide first whether the latter had the jurisdiction, because both Vodafone and Hutchison are based in foreign countries.