HC defers Vodafone tax dues case to Aug 2

The Bombay High Court has deferred its hearing of the dispute between Vodafone and the Income Tax Department over the telecom operator's liability to pay tax on its $11.1 billion buyout of Hutchison International's stake in Hutchison-Essar in 2007 till August 2.

Justice D Y Chandrachud and Justice J P Devadhar adjourned the matter till August 2 on a plea made by the Income Tax counsel.

On May 31, the court had stayed the ruling of the I-T Department, which held that it had the jurisdiction to tax the transaction, which involved a claim of around $2 billion.
    
The tax department's contention is that Hutchison made capital gains on the deal and while paying the purchase amount to Hutchison, Vodafone should have deducted tax on it.
    
The department first issued a show-cause notice to Vodafone in 2007, which it challenged before Bombay High Court. After the court dismissed Vodafone's petition, it went to the apex court in January, 2009.
    
The Supreme Court sent the case back to the I-T Department, to decide first whether the latter had the jurisdiction to raise the tax claim, because both Vodafone and Hutchison are based in foreign countries.
    
Since the I-T Department held that it had the jurisdiction, the case will begin afresh in the Bombay High Court.