NOT SUBJECT TO TAX IN INDIA: VODAFONE INTERNATIONAL

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VODAFONE International Holdings has said that the Indian income tax department did not have the jurisdiction to tax its $11.2-billion acquisition of Hutch Essar.

The company filed a detailed 1,800-page response to the show cause notice issued by the Indian tax authorities in October 2009.

"The authorised representatives of Vodafone International Holdings appeared before the assessing officer and submitted the company’s response to the show cause notice,” a tax department official said.

The company’s submission also includes opinions from several international tax experts on the issue and 24 annexure. But the company has filed only 23 annexure and sought six-weeks time to submit remaining one annexure.

The income tax department is considering the company’s request, the official said.

Tax authorities had last year in October issued a detailed 1,901-page show-cause notice to the Netherlands-incorporated Vodafone International Holdings, asking it to explain as to why it should not be treated as a defaulter for not deducting tax at source on the $11.2 billion paid to Hutchison Telecommunications International for the acquisition of Hutch Essar in May 2007.

If declared a defaulter, Vodafone Holdings will have to cough up about $2 billion as TDS along with another $2 billion as penalty. The notice was issued after the Supreme Court dismissed the company’s application questioning the income tax department’s jurisdiction over a Dutch company.

Vodafone had unsuccessfully challenged the earlier I-T notice in the Bombay High Court. The company had then filed a special leave petition in the Supreme court against high court’s decision but the apex court too dismissed the appeal.

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