I-T authorities can dissect any takeover deal: Apex courtAugust 4th, 2011 - 9:50 pm ICT by IANS
New Delhi, Aug 4 (IANS) The Supreme Court Thursday said income-tax (I-T) authorities can go behind a deal to ascertain whether it is a genuine and legal transaction or something else dressed up as a business deal.
The court said this a day after it was told by telecom giant Vodafone that there was nothing colourable in its transaction with Hutchinson International Ltd. for acquiring its Indian arm Hutch Essar in 2007.
The apex court bench of Chief Justice S.H. Kapadia, Justice K.S. Panicker Radhakrishnan, and Justice Swatanter Kumar asked Vodafone’s senior counsel Harish Salve: “Can you say that the Income-Tax department can’t go behind the transaction and see its legality and act on it.”
Salve said that “unless you (I-T authorities) are able to show that it (deal) is in fact a loan dressed up as transaction, you can’t act except under the express legislative mandate”.
He said the I-T authorities could not redefine the provisions of tax laws to impose taxes on it (Vodafone) when there was no express legislation for the same.
The court asked Salve that there were several transactions in the past but why was Vodafone picked for tax liability.
Salve said Vodafone was presented with a tax liability because it was a big ticket deal and thereafter many more companies were issued similar tax assessment notices.
Contending that the I-T authorities had no jurisdiction to levy tax on the telecom company for the transaction between the Netherlands-based Vodafone PLC and Hong Kong-based Hutchinson International Ltd., Salve said that capital will come to India only if there was hassle free entry and exit for it.
The court is hearing a challenge to the Bombay High court order asking the tax authorities to go ahead with the assessment of the tax liability of the telecom company arising out of its acquisition. The tax liability worked out to Rs.11,128 crore.
Salve would continue with his arguments Tuesday.
- Nothing colourable in takeover, Vodafone tells apex court - Aug 03, 2011
- Nothing colourable in takeover, Vodafone tells apex court (Lead) - Aug 03, 2011
- Supreme Court asks Vodafone to deposit Rs.2,500 crore (Lead) - Nov 15, 2010
- Apex court adjourns Vodafone plea on income tax order (Lead) - Oct 25, 2010
- India's apex court saves Vodafone $2.2-bn tax burden (Roundup) - Jan 20, 2012
- Government seeks review of Supreme Court's Vodafone verdict (Lead) - Feb 18, 2012
- Government's plea for Vodafone verdict review dismissed (Lead) - Mar 20, 2012
- Vodafone was told about tax liability in Hutchison deal - May 02, 2012
- Government seeks review of Supreme Court's Vodafone verdict - Feb 17, 2012
- Government studying court ruling on Vodafone tax dispute - Jan 25, 2012
- Government plea on Vodafone tax verdict dismissed (Second Lead) - Mar 20, 2012
- Vodafone files petition against tax authorities move - Oct 15, 2010
- Supreme Court dismisses petition in Vodafone case - Mar 02, 2012
- Indian tax authorities ask Vodafone to pay over Rs.112 bn (Lead) - Oct 22, 2010
- Vodafone moves Supreme Court against tax claim - Apr 05, 2011
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