Nothing colourable in takeover, Vodafone tells apex court

August 3rd, 2011 - 10:22 pm ICT by IANS  

New Delhi, July 3 (IANS) The Supreme Court Wednesday was told that there was nothing colourable in telecom giant Vodafone’s 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 was told that taking the Mauritius route for investment was a device to knock out the tax liability and this was a channel permitted by the central government to attract foreign direct investments.

Vodafone said this in response to a query by the Chief Justice S.H. Kapadia: “Do we take it that concession was not colourable but a device.”

Senior counsel Harish Salve, appearing for the company, told the court that “it was not a bogus transaction but the whole scheme was to knock out taxes”.

He said that “there was a distinction between colourable exercise and device directed only to knock out taxes”.

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.

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