Vodafone appeals in HC against I-T order

The second round of litigation between Vodafone and income tax department has landed in the Bombay High Court...

The second round of litigation between Vodafone and income tax department has landed in the Bombay High Court,with the company moving an appeal today.

The dispute pertains to the tax liability of Vodafone after it acquired the stake of Hutchison International in the Hutchison-Essar in a USD 11.1 billion deal in February 2007. On May 31,the income tax department held in a ruling that it had the jurisdiction to tax the transaction. The tax liability of Vodafone is estimated to be around USD 2 billion.

The company today said that it had moved High Court and it remains fully confident that no tax is payable.

The tax departments case 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 HC. After the High Court dismissed Vodafone’s petition,it went to the apex court in January 2009.

The Supreme Court sent the case back to IT department,to decide first whether the latter had the jurisdiction,because both Vodafone and Hutchison are based in foreign countries. No IT has held that it has the jurisdiction.