The Bombay High Court verdict upholding the $2-billion (Rs. 10,000 crore) tax notice on global telecom major Vodafone has ‘strengthened the hands’ of the Income-tax Department to scrutinise the sale of assets in India to a foreign buyer, Central Board of Direct Taxes (CBDT) Chairman N. B. Singh said here on Thursday. “[The] Bombay High Court has upheld our jurisdiction to look into the case. Total tax liability is estimated to be around $2 billion,” Mr. Singh told newspersons. Noting that the CBDT would also file a caveat in the Supreme Court as Vodafone proposed to approach the apex court against the High Court’s decision, the CBDT chief said: “The decision of the court in this case has strengthened the hands of the Income-tax Department in its attempt to bring collections to tax in India transactions involving transfer of assets situated in India between entities located outside the country.” In a $11.2-billion deal, Netherland-based Vodafone Holdings International had picked up Hutchison’s stake in Hutchison-Essar in 2006 to form a new entity Vodafone-Essar Ltd. Subsequently, the IT authorities issued a notice to Vodafone-Essar last year for capital gain tax amounting to $2 billion.
CAclubindia
