The Income Tax Department is preparing to collect capital tax amounting to Rs 122 billion from Vodafone and the Hutchison Group.
According to the Income Tax Department these tax are due from a 2007 deal Vodafone acquired 67 per cent stake in the Hutchison-Essar from Hong Kong-based Hutchison Group through companies based in
The Rs 79 billion being demanded by the revenue department is the capital gains tax supposedly payable ?as an agent? of Hutch. Additionally, the British Telecom major will have to pay another Rs 43 billion as interest till March 2012.
The Income Tax Department is going to send notices to both these companies once Pratibha Patil, President,
Vodafone will be served a notice under Section 201 for not withholding tax for
Rs 11.2-billion acquisition in May 2007 while Hutchison is also likely to be served a notice under Section 143 of the Income tax Act. The notice to Hutch is to inform the Company about the capital gains tax, which they should have paid.
Vodafone has challenged the claim of Indian tax authorities that it?s a ?representative assessee? of Hutchison. The tax department claimed that Vodafone being a ?Representative Assessee? or an agent of Hutchison Telecommunications International Ltd (HTIL). The tax authorities maintain that as a consequence of this status, Vodafone should have acted proactively by withholding tax from the payment that was due to HTIL. Vodafone has challenged this claim in the Mumbai High Court. The arguments on the case are slated to resume on
