Vodafone Essar challenged the right of the income tax authorities to levy a capital gains tax on it by filing a writ petition in the Bombay High Court, reports Economic Times.
The I-T department issued a showcause notice to Vodafone Essar asking an explanation why it (Vodafone Essar) should not be treated as an agent of Hutchison International.
Hutchison International sold majority stake in Hutchison Essar to Vodafone for USD 11.2 billion. Hutchison Essar is now called Vodafone Essar.
The writ is aimed at preventing the income-tax department from taking further action.
The court is likely to hear the petition on September 27 and if the court grants an injunction or stay, to Vodafone Essar, tax authorities may not be able to proceed further.
The transaction value being USD 11.2 billion, the tax liability could be USD 1.7 billion which Hutchison - the seller, would ordinarily have. Since the tax authorities do not have access to Hutchison in Hong Kong, they have issued a notice to Vodafone Essar.
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