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Sarin meets FM; Vodafone awaits court verdict

Vodafone CEO Arun Sarin says that the company would await the court verdict on the $1.7-billion tax claim served by the government, reports Gaurav Choudhury.
Hindustan Times | By Gaurav Choudhury, New Delhi
UPDATED ON OCT 08, 2007 11:13 PM IST

VODAFONE CHIEF executive officer Arun Sarin said on Monday that the company would await the court verdict on the $1.7-billion tax claim served by the government. The income tax department had served a $1.7 billion capital gains tax notice on the British telecom giant after it acquired Hutchison’s stake in a joint venture with the Essar group.

"There was no discussion (during the meeting) on the notice from the income tax department. The matter is in the court and we will wait for the decision of the court,” Sarin said after his meeting with Finance Minister P Chidambaram.

Hutchison Essar was renamed Vodafone Essar after the UK major bought a controlling stake in India’s fourth-largest telecom service provider for $11.2 billion earlier this year.

Tax department officials maintain that income derived in India directly or indirectly is taxable in the country. “While the recipient (Hutchison) is the final taxpayer, Vodafone failed to discharge its tax liability,” officials said. "Vodafone is the payer in this case. So it has the liability of payer," they added.

The company has contested the claim and approached the Bombay High Court.

During his last visit, Sarin had said Vodafone was not liable to pay tax.

The world’s largest mobile operator has also scaled up its capital expenditure plans to $2 billion a year in India and is open to sharing infrastructure with competitors.

"Since our entry into India, our capital expenditure has doubled. We are now spending $2 billion a year," he said.

"We are looking at ways to piggyback on each other's infrastructure to reach out to the masses quickly," Sarin added.

Vodafone has also established a $10-million foundation to undertake social programmes."The Vodafone India Foundation would initially focus on projects associated with providing education to youths across the country, enabling the development of higher skill sets," the Vodafone CEO said.

The company announced plans to cover all 39,000 villages of West Bengal over the next one year -- 30,000 villages have already been covered so far.

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