I-T Dept against Vodafone contesting tax claim under two bilateral treaties

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British Telecom major Vodafone and the Indian Tax Department have failed to reach common ground on the legalities of the Rs 20,000 crore tax dispute between them.

Vodafone reportedly wants to push for arbitration under the India-UK bilateral treaty after already having done so under the India-Netherlands bilateral treaty.

However, according to a CNBC-TV 18 report, the tax department has stated to the Delhi High Court (HC) that it is against Vodafone initiating arbitration proceedings under two separate forums, calling it an unfair use of the proceedings.

Incidentally, the Delhi HC had in August restrained Vodafone from pushing for arbitration under the India-UK treaty for the same reason.

The tax dispute in question is a decade-old one arising from the government’s view that Vodafone’s USD 11 billion acquisition of the Indian mobile business of Hutchison Telecommunications International was liable for tax deduction at source (TDS) under the provisions of the Income Tax Act.

The High Court has now said it will hear both sides of the argument in January next year.