CBDT CLARIFIES “VODAFONE WAS WARNED”

PRESS RELEASE DATED 2-5-2012

A news report has appeared in the Financial Express, Delhi edition, 27th April, 2012 captioned “I-T didn’t warn Vodafone of tax burden or dispute deal format”. In this regard, the Central Board of Direct Taxes (CBDT) has issued the following clarification:-

In this connection, it may be noted that the first notice in the transaction relating to sale of 66.9848% stake of Hutchison Essar Ltd. (HEL) was issued on 15th March, 2007 under section 133(6) of the Income-tax Act, by the Additional Director of Income Tax (International Taxation), Mumbai to HEL in which it was asked to submit certain details regarding the transaction including shareholders agreements and memorandum of understanding between Hutchison Telecommunications International Ltd. and Vodafone Group dated 11th February, 2007. In the said notice, it has been clearly mentioned that as per information available (from Press Releases of the parties concerned), Vodafone International Holdings BV proposes to acquire the entire issued share capital of CGP Investments (Holdings) Ltd., a company incorporated in Cayman Islands indirectly from HTIL and the full details of the transaction was sought.

When the Indian company showed its inability to submit the details, another notice was issued on 23rd March, 2007 in which, after quoting the Press releases from HTIL and Vodafone, it was mentioned that HTIL/Hutchison Group had made substantial gains from their investment in HEL. It was clearly mentioned that the capital gains are chargeable to tax in India. It was further mentioned that if in case, parties to the transaction proposes to advance any other view, they are at liberty to