Gujarat high court rejects Vodafone scheme for passive infrastructure assets transfer

11 Dec 2010

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In what may come as a major set back to telecom giant Vodafone-Essar Limited, justice K A Puj of Gujarat high court has disallowed the demerger scheme of Vodafone-Essar Gujarat Limited (VEGL) and its parent company Vodafone-Essar Infrastructure Limited (VEIL).

The demerger scheme mainly involves the transfer of properties, particularly, mobile towers of the company's Gujarat circle to its parent company.

The court order comes following strong objections by the Income Tax (I-T) department which contended that the proposed demerger could attract charges of massive duty evasion by the telecom operator.

The judge, however, suspended the order for two weeks, following a request by counsel for Vodafone-Essar for approaching the higher court.

Nitin Mehta, counsel for the I-T department, said, ''The high court has not granted sanction for the demerger as we contended that the scheme is nothing but a means to evade huge tax liability as well as stamp duty.''

Meanwhile, according to Vodafone-Essar spokesperson the company would review the order given by the Gujarat high court with its counsels to decide its next course of action.

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