Indus scheme inter-linked with demerger schemes of Vodafone, Bharti: I-T commissioner

The Income Tax Department, in an affidavit submitted before the High Court of Delhi, has said that the demerger schemes — transferring passive infrastructure assets of Vodafone and Bharti Infratel, and the present scheme of Indefeasible Rights to Use Agreement to the transferee company Indus Towers Ltd, are dependent and inter-connected.

The Commissioner and deputy commissioner of Income Tax circle – 17(1) Delhi, New Delhi prayed that the High Court of Delhi should dismiss the petition filed by Vodafone Infrastructure Ltd in Delhi High Court. The company in its petition has said that the schemes are independent and not connected.

In the affidavit, the commissioner of Income Tax has also stated that the demerger schemes and the present scheme are part of the composite scheme and it is an intentional misrepresentation and a fraudulent statement by the petitioner companies that they are distinct and independent schemes of arrangements.

It is said that the agreements between Vodafone Essar East Ltd and Indus Towers were executed in 2008 and were made effective from January 1, 2009. The transfer of passive infrastructure assets and giving exclusive usage rights to Indus Towers was pre-determined and Indus Towers was established with a clear intent to avoid legitimate tax payable to the Central and state Governments.

The affidavit also mentions that if the present scheme is sanctioned, the incidence of tax arising is likely to be lost and will be detrimental to the Objector’s (Income Tax Department) right to levy and assess tax on this transaction.

In 2007, Vodafone India, Bharti Infratel and Aditya Bilra Telecom entered into a joint venture called Indus Towers. While Bharti Infratel and Vodafone hold 42 per cent each and Aditya Birla telecom holds 16 per cent stake in Indus Towers.

Bharti declined to comment.