Arguing for Vodafone, senior counsel Iqbal Chagla termed the case as a ‘pathbreaking matter', saying that for the first time IT Dept is seeking to collect tax in this way.Chagla
said that while Vodafone
is a Dutch company, Hutchisson is incorporated in Cayman Islands.Income Tax act does not apply in such a situation, he
argued, a share-purchase did not amount to transfer of capital assets.
Department is holding Vodafone
liable because it expected Vodafone to deduct capital gains tax while making payment to Hutchisson.But Chagla
argued that since the entire deal occurred on foreign soil, if Vodafone
were to shell out the tax, there was no way it could recover it from Hutch, which was the seller.
"No notice was ever sent to Hutch," Chagla