Corporate Sep 3, 2012
Finance Minister P Chidambaram said there will be no "rash" action in Vodafone tax case and the matter will be decided after considering all aspects including recommendations the Shome Committee on indirect transfer of assets.
"They (I-T assessing officers) and are not going to act rashly. These are not small amounts on which you can take a rash decision," he said. He was asked whether the tax officials would send notice to Vodafone for collection of tax following amendment in the Income Tax Act with retrospective provisions during the Budget session of Parliament.
The Income Tax Department on October 22, 2010 passed an order determining a tax liability (including interest) of Rs 11,218 crore on Vodafone on acquisition of Hutchinson's stake in Hutch-Essar through a deal in Cayman Islands in 2007.
The Supreme Court, however, quashed the order in January this year. After the apex court's ruling, the Income Tax Act was amended with retrospective effect to bring into tax net such deals. "There is section 119. There is a Supreme Court judgement. There is opinion of the Attorney General. All this have to be studied by the assessing officer and his supervising officers... They will study all that. In the meanwhile, we will get the Shome committee's report also," Chidambaram added.
Section 119 of the Finance Act, 2012 seeks to validate the October 2010 order of the Income Tax Department. The Department had also passed an order imposing a penalty of Rs 7,900 crore in April, 2011. However, the penalty demand was not enforced in view of a Supreme Court's direction dated April 15, 2011.
To a query instruction to tax officials on restrospective amendements to I-T Act with respect to indirect transfers of assets, he said, "We have not given any instructions. Nothing will happen. Wherever there is litigation, litigation is there. Wherever replies have been given, replies will be considered. No special instruction has been given."