New Delhi(PTI): The Supreme Court today dismissed Government’s plea seeking review of its verdict which held that Income Tax Department does not have jurisdiction to levy Rs 11,000 crore as tax on the overseas deal between Vodafone International Holdings and Hutchison Group.
A bench comprising Chief Justice S H Kapadia and Justice K S Radhakrishnan dismissed the Centre’s review petition in the Vodafone tax case during an in-chamber proceeding,
In the petition, the Centre contended there was a need for reconsidering the Janaury 20 verdict as the law on deciding the case involving the telecom major has not been correctly interpreted.
It had raised several points to contend that the verdict was erroneous.
The court had given the verdict allowing Vodafone’s appeal and had quashed the Bombay High Court verdict which had upheld the decision to levy tax on the overseas deal.
After the review petition was filed on February 17, the government in its March 16 budget proposed to amend the Income Tax Act to levy capital gains tax on domestic asset acquisition through merger and acquisition deals involving foreign companies.
Finance Minister Pranab Mukherjee in the budget indicated amendments in direct tax laws with retrospective effect to allow the government to tax income “accruing or arising directly or indirectly through the transfer of capital asset situated in India”.
The apex court had also held that Vodafone’s transaction with Hong Kong-based Hutchison Group was a “bonafide” FDI which fell outside the tax jurisdiction of the Indian authorities.Through the USD 11.2 billion deal in May 2007, Vodafone had acquired 67 percent stake in the Hutchison-Essar Ltd (HEL) from Hong Kong-based Hutchison Group through companies based in the Netherlands and Cayman Island.
The apex court had held that the offshore transaction was a “bonafide structured FDI investment” into India, which fell outside India’s territorial tax jurisdiction.
It had asked the I-T Department to return Rs 2,500 crore deposited by Vodafone, in compliance of its earlier interim order, within two months along with four percent interest from the date of withdrawal of money by the tax department.
It had also asked the Supreme Court registry to return within four weeks the bank guarantee of Rs 8,500 crore given by the telecom major.