Vodafone says no comment on Income Tax Dept’s review petition

Vodafone India said it has “noted” the government of India’s petition urging the Supreme Court to review its decision on the company’s tax liability in India at the time of its entry.

The Supreme Court had, on 20 January, ruled that since Vodafone bought the Indian unit from a foreign company in a foreign country, neither it nor the seller was liable to pay capital appreciation tax in India.

The Indian authorities wanted to levy capital appreciation tax from the seller, or Vodafone if the seller was not available, on the deemed value of the assets that lay in India and were transacted in the sale.

The demand had sent alarm bells ringing in many quarters as, by the same logic, any overseas acquisition would be taxable in India if the acquired company had any assets here.

The Supreme Court had held that the transaction was a “bona fide structured FDI investment into India which fell outside India’s territorial tax jurisdiction” and ordered the government to return Vodafone’s initial payment with interest.

“Vodafone notes the filing of the tax authority’s review petition, which will be evaluated by the same bench that ruled on the Vodafone-Hutchison case, and has no further comment to make at this stage,” Vodafone said in a statement.