Supreme Court admits Tax department’s appeal against Vodafone

Supreme Court of India

New Delhi: On Friday, 13th of May the honourable Supreme Court of India decided to admit the appeal which is filed by the Income- Tax Department against the decision of the High Court of Bombay. Moreover, the said High court had earlier decided to reject the demand of the Income- Tax department for raising tax on the deal of Vodafone with Hutchison on 8,500 crores of rupees deal.

The decision of such admission of the appeal, is taken by the bench of the Apex Court, which was headed by the Justice- Anil Dave and after such admission, the bench also decided to issue notice to the telecom- company.

It was seen earlier in the month of April, this year, that the High Court of Bombay had set aside an order of the Income- Tax Appellate Tribunal. The said Tribunal through its order earlier decided that the Income- tax department is having power to raise a tax demand on company- Vodafone in connection with its sale of call centre business to Hutchison Whampoa Properties in the years 2007- 2008 and also in connection with the assignment of a call option to the Vodafone.

Moreover, when High Court decided in its order that the decision of the Income- Tax Appellate Tribunal is not correct, then it was also held that option rights’ surrender was not a transfer under the provisions of the Income- Tax Act. Also, it was pointed by the Income- Tax Department that there is question involved of the taxability of capital gains arising from the surrender of call option rights. Moreover, it is also notable here, that the ruling of the high court is also having effects against the other big entities like Shell, IBM and Nokia.

However, apart from this case, the department is also having another case against the Vodafone, however, the High Court rejected a claim that Vodafone priced and shares of its stakes in its Indian companies sold to other arms of Vodafone in a manner that would avoid the taxes. However, in this relation, the department had not preferred to file challenge.

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