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No rash action in Vodafone case: FM

Finance minister P Chidambaram on Monday said there will be no ‘rash’ action in Vodafone tax case and the matter will be decided after considering all aspects including recommendations the Shome Committee on indirect transfer of assets.

‘(The IT assessing officers) are not going to act rashly. These are not small amounts on which you can take a rash decision,’ he said. He was asked whether the tax officials would send notice to Vodafone for collection of tax following amendment in the Income Tax Act with retrospective provisions during the Budget session of Parliament.

The IT department on 22 October 2010 passed an order determining a tax liability (including interest) of Rs 11,218 crore on Vodafone on acquisition of Hutchinson's stake in Hutch-Essar through a deal in Cayman Islands in 2007.

The Supreme Court, however, quashed the order in January this year. After the apex court's ruling, the Income Tax Act was amended with retrospective effect to bring into tax net such deals.

‘There is section 119. There is a Supreme Court judgement. There is opinion of the Attorney General. All this have to be studied by the assessing officer and his supervising officers... They will study all that. In the meanwhile, we will get the Shome committee's report also,’ Chidambaram added.

Section 119 of the Finance Act, 2012 seeks to validate the October 2010 order of the IT department. The department had also passed an order imposing a penalty of Rs 7,900 crore.
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