| The battle between Vodafone and the income tax department over capital gains tax liability on the Hutch Essar sale is likely to be a long drawn out one, with Vodafone chief executive officer Arun Sarin saying on Monday that the matter will be decided by the court.
Sarin, who met finance minister P Chidambaram on Monday said after the meeting, We did not discuss taxes. The matter is in the court and it will not be appropriate to comment on it. The companys position is quite clear and it will wait for the court's decision, he added. The Income Tax department has sent a notice to Vodafone, asking for about $1.7 billion as capital gains tax in the sale of 52% stake in Hutchison Essar to Vodafone. The company has however contested the notice and has approached the Bombay High Court, where the matter is pending.
During his last visit, Sarin had clearly spelt out that Vodafone has no such tax liability.
Neither the Essar Group, nor Vodafone, nor Vodafone Essar is liable to pay taxes. It is the seller who should be taxed; and the seller is not one of the parties represented here, he said. Sarin however discussed other issues with the finance minister. We spoke about the Vodafone Fund which we have launched on Monday and also about our business plans in the country, Sarin said. The company on Monday also committed $10 million to the Vodafone India Foundation. While the fund will help establish the companys presence in India, it will also provide direct grants to locally registered charities and global NGOs with social investment aims and objectives, a company release said. It will initially focus on projects associated with providing education for young people across India, enabling the development of higher skill sets.
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