Further developments in Vodafone

As expected, the Income Tax Department has confirmed that it has jurisdiction over the Hutch-Vodafone transaction. It also appears that the Revenue is making attempts to bring Vodafone into the ambit of a representative assessee u/s 163 of the Income Tax Act. Essentially, Vodafone had claimed that (a) the transaction was not chargeable to tax under the Income Tax Act, 1961; and (b) in any case, Vodafone is under no obligation to deduct tax at source u/s 195 as section 195 does not extend to payments between two non-residents. The Department stance now seems to be (a) the transaction is chargeable to tax u/s 9 of the Act, (b) Vodafone is liable to deduct tax at source u/s 195; and (c) in any event, Vodafone is liable as a representative assessee u/s 163. We have previously discussed chargeability (here and here), and whether Section 195 applies with respect to payments between two non-residents (here); I will discuss the issues arising under Section 163 subsequently.