The Supreme Court today dismissed Government’s plea seeking review of its verdict which held that Income Tax Department does not have jurisdiction to levy Rs. 11,000 crore as tax on the overseas deal between Vodafone International Holdings and Hutchison Group.
After the review petition was filed on February 17, the government in its March 16 budget proposed to amend the Income Tax Act to levy capital gains tax on domestic asset acquisition through merger and acquisition deals involving foreign companies.
Finance Minister Pranab Mukherjee in the budget indicated amendments in direct tax laws with retrospective effect to allow the government to tax income “accruing or arising directly or indirectly through the transfer of capital asset situated in India”.
The apex court had also held that Vodafone’s transaction with Hong Kong-based Hutchison Group was a “bonafide” FDI which fell outside the tax jurisdiction of the Indian authorities.
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