Not directed Income-Tax dept to reopen Vodafone-like tax cases: Govt

The government on Tuesday said it has not directed the Income-Tax (I-T) Department to reopen cases similar to the Rs 11,000-crore tax claim from Vodafone.

"The government has not issued any direction in this regard," Minister of State for Finance S S Palanimanickam said in the Rajya Sabha in a written reply.

The minister's reply was to a specific question whether the government was considering to reopen cases similar to Vodafone.

"The decision to reopening or not reopening a (I-T) case... is taken by the assessing officer on the basis of facts and circumstances of each case," Palanimanickam said.

He also said the clarificatory amendments in the Finance Bill will not have adverse impact on the investment from abroad.

Apprehensions have been expressed in a certain section of the industry that such changes may discourage foreign direct investment.

"The clarificatory amendments proposed in the Finance Bill, 2012, will not have any impact on foreign direct investment flow in the country," Palanimanickam said.

The Vodafone tax controversy pertains to Budget proposal to amend the Income Tax Act, 1961, with retrospective effect to bring into tax net overseas mergers and acquisitions involving assets in India.

After amendment is approved, the government may initiate the process of raising a tax demand on Vodafone for its acquisition of Hutchison's stake in Hutchison Essar, even though the Supreme Court had set aside I-T department's demand for the same.

In a separate reply, Palanimanickam said Vodafone has not approached the government for an out-of-court settlement for the tax case.

Finance Minister Pranab Mukherjee had on Monday said retrospective amendment to I-T Act to tax capital gains on sale of assets located in India through indirect transfer abroad will impact only those deals which are routed through "low tax or no tax countries with whom India does not have a Double Tax Avoidance Agreements (DTAA)".

The British telecom major Vodafone signed the $11.2 billion deal to acquire stake of Hutchison in Hutchison Essar was executed in Cayman Islands in 2007.

India does not have a DTAA with Cayman Islands.