SC asks Vodafone to deposit 2.

5k cr
TIMES OF INDIA

16 November 2010

Agrees To Hear Telco’s Plea In Tax Case But Asks It To Secure Rest Of. 8.5K Cr
TIMES NEWS NETWORK

New Delhi: The Supreme Court on Monday agreed to hear Vodafone’s appeal challenging a
Bombay High Court order validating nearly $2 billion capital gains tax on its $11 billion
acquisition of Hutch and directed the Dutch telecom giant to deposit Rs 2,500 crore within
three weeks.
A bench comprising Chief Justice S H Kapadia and Justices K S Radhakrishnan and
Swatanter Kumar also asked Vodafone to secure the rest of the demand, i.e. Rs 8,500
crore, by providing bank guarantee of a nationalized bank within eight weeks.
Vodafone’s counsel Harish Salve, who vehemently questioned the manner of
computation of capital gains tax by the assessing authority, agreed with the interim order
as the bench repeatedly asked the Dutch company whether it had ever offered to
compartmentalize the capital gains—in India and foreign land—before the authorities.
However, attorney general G E Vahanvati questioned the way Vodafone acquired 67% of
Hutchison Telecommunications International (HTIL) which tried to give an erroneous
impression that only 13% of it was acquired in India, and hence only this part was liable to
capital gains tax.
Vahanvati said the total amount due was Rs 11,000 crore and if one took the principal
amount due, i.e. Rs 7,000 crore, then the appeal should be heard only after Vodafone
deposited at least half the amount, that is Rs 3,500 crore.
Salve said the income tax department had adopted a curious approach in this case and
had erroneously termed the transfer of share capital from HTIL to Vodafone as capital gain.
Salve continued to argue that Vodafone had a good case to show to the court that very
little was payable in terms of capital gains tax as the whole transaction was nothing but
upstream transfer of shares from one company to another.
Taxman’s Call

Feb 11, 2007 |

Vodafone buys Hutchison’s 67% stake in Hutchison-Essar for $11 bn

Sept 19 |

I-T sends notice to Vodafone for $2.6 bn in taxes

Oct |

Vodafone moves Bombay HC against I-T notice

Dec 3, 2008 |

HC rules Vodafone’s Hutch deal is taxable in India

Jan 2009 | SC asks I-T to decide issue of jurisdiction; allows Vodafone to move HC

Oct 30 |

I-T showcases Vodafone

May 31, 2010 |

I-T says entire Vodafone-Hutchison transaction is taxable

June 7 |

Vodafone again moves HC

Sept 8 |

HC dismisses Vodafone plea, upholds I-T department’s action

Oct 23 |

I-T dept hands Vodafone $2.5 bn tax bill