The finance minister Pranab Mukherjee has given an indication that government is studying and giving a serious thought to the implications of last week’s Supreme Court’s verdict setting aside Bombay High Court’s order which directed the company to pay income tax of Rs 11,000 crore.
In an informal chat with the media persons during the lunch a couple of days back he conceded that the judgment is will have huge implications as it is not limited to Vodafone alone. The Income Tax department is also closely watching other deals involving Idea, IT&T and Tata.
The whole issue erupted after the IT Department issued a show cause notice treating Vodafone as a representative assessee of the Vodafone International Hold. It said that the company is liable to pay tax as capital gains were made in India through the deal. Vodafone moved the High Court, but its plea that it was share transfer carried outside India was rejected.
The apex court its ruling had maintained that Vodafone has no obligation under section 163 clause 1 (c) of Income Tax Act It said the companies (Vodafone and Hutchison) are incorporated outside and their transaction outside India has "no underlying nexus" with tax authority here.