Pranab looking at tax implications of large cross-border deals

Last Updated 29 October 2010, 09:00 IST

"The Department of Revenue is looking at all large financial transactions. We are definitely looking at cross-border transactions," Revenue Secretary Sunil Mitra said on the sidelines of a FICCI event here.

"Cross-border transactions are a recent phenomenon. They have started since 2006, so there is need to look into these and study these," he added.

Responding to a query on whether the Ministry is looking into more companies after the Vodafone tax issue, which embroiled the tax office and the international cellular operator in a major court battle, Mitra said the department has been doing so even before Vodafone happened.

"Vodafone happened in middle of 2007. We have been looking into a number of cases, acquisitions that have happened through overseas transactions," Mitra said.

The government last week asked Vodafone to pay Rs 11,218 crore in taxes within a month for the acquisition of Hutchison's stake in the telecom joint venture in India in 2007.

The notice was issued following the Supreme Court directive on September 27 to the IT assessing officer to determine and quantify the tax liability of Vodafone within four weeks. Vodafone Essar, however, contested the tax notice.

The case relates to a deal in 2007 when Vodafone, through its group firm Vodafone International Holdings, bought Hutchison Telecommunications India's (HTIL) 67 per cent stake in Hutchison Essar for over USD 11 billion.

"The tax demand has been raised in pursuance to the direction of the Supreme Court of India dated September 27 to the Income Tax Assessing officer to determine and quantify the tax liability of Vodafone within four weeks," an official has statement said.

Last month, the Supreme Court had refused to stay a High Court order, which ruled that Indian income tax authorities have jurisdiction to tax Vodafone on its deal with Hutch.

(Published 29 October 2010, 09:00 IST)

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