Taxman seeks SC transfer of cases related to Bharti, Idea asset demerger
The income tax department on Wednesday told the Supreme Court that it intends to move a plea seeking transfer of the two other cases related to transfer of certain passive infrastructure assets of Bharti Airtel and Idea Cellular to the apex court.
Bharti Airtel and Idea Cellular got Gujarat High Court’s approval for demerging towers in August 2009 and their schemes sanctioned without any objections from the tax authorities. However, the latter has objected to Vodafone Essar Gujarat’s demerger of towers to Vodafone Essar Infrastructure, contending it is the first step in an alleged tax avoidance arrangement prior to this entity’s amalgamation into Indus Towers, which also holds the towers of Bharti and Idea for common use.
The department also told a bench headed by justice FMI Kalifulla that it has begun proceedings against Vodafone Essar Gujarat in relation to transfer of certain passive infrastructure assets.
It further said that it has begun proceedings against Vodafone Essar Gujarat in relation to transfer of certain passive infrastructure assets to Vodafone Essar Infrastructure (VEIL). While VEIL was subsequently wound up and amalgamated into a new company called Indus Towers, the I-T department called the entire transaction a “colourable device” to avoid paying taxes.
Under the scheme, Vodafone Essar Gujarat and its six associate companies were permitted to transfer passive infrastructure assets worth R15,000 crore to group firm Vodafone Infrastructure. The department had challenged it saying the scheme was intended to avoid capital gains tax worth R3,500 crore and stamp duty worth R600 crore, a charge Vodafone strongly denies.
