I-T questions Vodafone’s asset transfer move
The department has challenged a Gujarat High Court order, which approved the company's plan to transfer passive infrastructure assets (PIA) — that include mobile communication towers and other related physical equipment worth R20,000 crore — from Vodafone Essar Gujarat and six other associate companies to group firm Vodafone Essar Infrastructure.
It has claimed that the scheme was intended to avoid capital gains tax worth R3,500 crore and stamp duty worth R600 crore and the transfer of these assets would have attracted the central sales tax or states VAT and other provisions of the Income Tax Act, 1961.
A bench headed by Chief Justice Altamas Kabir has sought reply from the company as to why it should be allowed to transfer its assets without paying capital gains tax.
The revenue authorities have said that the demerger scheme was against public interest and contrary to the company’s memorandum. It had further alleged the scheme was nothing but conduit to evade taxes such as I-T, stamp duty, registration charges and value-added tax.
“Despite recognising that the scheme may result in tax avoidance, the HC had proceeded to accord sanction... It is one thing for an assessee to engage in tax planning and quite another for a court exercising its jurisdiction under the Companies Act to sanction a scheme which is acknowleged as having the
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