HC dismisses Vodafone8217;s petition against I-T Dept

Vodafone8217;s representative said that the company would be filing an appeal in the Supreme Court very soon.

Vodafone Holdings International, a Netherland-based company, picked up the stake of Hutchisson in Hutchisson-Essar to form the new entity Vodafone-Essar in a USD 11.2 billion deal in 2006.

I-T authorities issued a notice to Vodafone Essar last year for capital gains tax to the tune of around USD two billion. Though seller of assets has to pay this tax, I-T expected Vodafone to deduct the tax before making payment to Hutch.

Vodafone8217;s lawyer Iqbal Chhagla had argued that Vodafone is a Dutch company, Hutchisson is incorporated in Cayman Islands and Income Tax Act does not apply in such a situation.

Secondly, he had argued, a share-purchase did not amount to tranfer of capital assets which could be taxed.

The I-T Department held Vodafone liable because it expected the company to deduct capital gains tax while making payment to Hutchisson.