★★Breaking News ★★ AAP will oppose any change in law to bail out Vodafone In its first general budget, the NDA government should not tamper with the 2012 amendment in the Income Tax law which makes it mandatory for foreign companies to pay tax with retrospective effect for mergers and acquisitions of companies having operations in India. During the last few days, a number of news reports in different sections of the media have indicated that the new government is likely to reverse the 2012 amendment in the IT Act, made by the then finance minister Mr Pranab Mukherjee. In case the new finance minister, Mr Arun Jaitley, makes the announcement to scrap the amended law which allows the government to tax deals which have already been concluded, the Aam Aadmi Party will oppose the decision, since it is aimed at directly benefitting the British telecom giant, Vodafone. If the news reports turn out to be true and the NDA government scraps the retrospective tax amendment clause from the IT Act, it will become clear that this government wants to help the British company in evading the Rs 20,000 crore tax, it is to pay in India. ✅Vodafone has been evading payment of its taxes to the Indian government since 2007 and it should not be allowed any further breathing space in this case. In 2007, Hutchinson Telecom International (HTIL), which owned 67 per cent of Hutch Essar Limited (HEL), an Indian telecom company, sold its holding to Vodafone International (VIH BV). Both companies announced that Hutchinson had sold, and Vodafone had bought, 67 per cent of the shares and interest in the Indian company for over $11 billion. Section 9(1) of the Income Tax Act says incomes which shall be deemed to accrue or arise in India include “all income accruing or arising, whether directly or indirectly, through … the transfer of a capital asset situated in India.” Since the transfer of the Indian telecom firms shares and assets to Vodafone had led to capital gains for Hutch, the IT department demanded capital gains tax from Vodafone, which was liable to withhold this tax from the amount they paid Hutch. Vodafone claimed the transaction was not liable to tax since it was achieved by transferring the shares of a Cayman Island-based holding company and did not involve the transfer of a capital asset situated in India. The Bombay High Court rejected this contention and ruled that the transaction between the two companies was structured so as to achieve the object of discontinuing the operations of Hutch in India and allow profits for Vodafone. The Vodafone appealed against this judgment in the Supreme Court, which accepted the company’s claim that the capital gain had arisen only from the transfer of the single share in the Cayman Island company and had nothing to do with the transfer of any asset situated in India. There was widespread criticism of this February 2012 judgment, which led to the then government bringing an amendment in the IT Act, restoring the original liability of Vodafone to pay the tax, therefore the AAP is of the clear view that there is no need to tamper or clarify the existing position. The government must send a clear signal that India is not a banana republic where foreign companies can be invited to loot our resources and even avoid paying taxes on their windfall gains from the sale of those resources. ───────────────────── ▼▼▼▼Brought to you by▼▼▼▼ @AAPWhtsappPulse
Posted on: Thu, 10 Jul 2014 02:18:19 +0000
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