Tax demand on Vodafone, Cairn cannot be disputed: CBDT
March, 02nd 2016
Asserting that the tax demand against them has been “rightly generated”, the Central Board of direct Taxes (CBDT) on Tuesday said companies such as Vodafone and Cairn Energy should promptly avail the one-time dispute resolution scheme announced in the budget to close the issue by paying the principal tax and getting waiver on interest and penalty.
CBDT chairman Atulesh Jindal said “as long as” the retrospective amendment of the I-T Act passed by Parliament remains valid, the “demand (of tax against them) remains valid.”
Jindal said apart from UK’s Vodafone Group and Cairn Energy, there are about a dozen more such companies which are facing similar demands due to the retrospective amendment of the Income-Tax Act.
“They (companies) are basically challenging the retrospective amendment. Retrospective amendments have been passed by Parliament. They have not gone against passing of retrospective amendment before any court...so, as long as the retrospective amendment is valid, the demand remains valid. Of course, it (demand) very much remains and this is a rightly generated demand,” he said.
Finance minister Arun Jaitley, in his budget speech on Monday, announced a new dispute resolution mechanism for such companies. “In order to give an opportunity to the past cases which are ongoing under the retrospective amendment, I propose a one-time scheme of dispute resolution for them,” Jaitley said.
The scheme entails paying up of the principal tax by the company and at the same time getting a waiver on interest and penalty.
The CBDT chief said the government has always made it clear that tax disputes “are not” covered under the Bilateral Investment Promotion and Protection Agreement (BIPA).
The department cannot go back on the tax demand raised against these firms as assessment orders were “already passed” and “demands raised” before the I-T Act was amended retrospectively, he added.