High Court To Hear Vodafone Appeal On July 8, 2010 By TII News Service
Jun 28, 2010 , Mumbai
THE Bombay High Court has posted for July 8, the final hearing of Vodafone challenging the jurisdiction of the tax authorities to tax the company US $2 billion as capital gains tax on its takeover of Hutchinson’s stake.This follows the Supreme Court’s decision to revert the case to the tax authorities to decide whether the issue of jurisdiction to charge tax in a case where both the companies, the buyer and the seller are based in foreign countries.
On May 31, the tax authorities issued a notice to Vodafone that has now appealed in the Bombay High Court. This case is being closely watched as a decision in favour of tax authorities is expected to open up a Pandora’s box involving the reopening of several cases pertaining to foreign companies.
In 2007, the UK-based Vodafone group had acquired the 67 per cent stake of Hong Kong-based Hutchinson Telecommunications International in Indian company Hutchinson Essar. The revenue authorities held that capital gains tax could be charged on the profit made on the investment in India that had effectively changed the ownership of an Indian company. Revenue believes that Vodafone should have deducted tax at source.
