New Delhi: The Supreme Court on Tuesday dismissed the Centre’s plea seeking review of its January 20 verdict which held that Income Tax Department does not have jurisdiction to levy Rs 11,000 crore as tax on the overseas deal between Vodafone International Holdings and Hutchison Group.

A three member bench headed by Chief Justice SH Kapadia dismissed the government’s review petition during an in-chamber proceeding saying that the overseas deal falls under the FDI rules and the Income Tax laws cannot be applicable in this case.

The government had filed a review petition in the Apex Court on February 17 seeking to reconsider its January 20 verdict citing that the laws deciding the Vodafone tax case was misinterpreted.

The court had given the verdict in Vodafone's favour and had quashed the Bombay High Court’s verdict which had upheld the decision to levy tax on the overseas deal.

Vodafone had argued that India cannot levy taxes because the transaction was made between non-Indian companies outside the country. In 2007, the deal was penned between, Vodafone International Holdings BV - a Dutch subsidiary of the UK firm and CGP Investments Ltd., a Cayman Islands company which held the Indian telecom assets of Hutchison. Vodafone lost its case in the Bombay High Court in 2008 and subsequently appealed against that verdict in the Supreme Court.

On March 16, the government in its budget had proposed to amend the Income Tax Act to levy capital gains tax on domestic asset acquisition through merger and acquisition deals involving foreign companies.

JPN/Bureau