V'fone, I-T imbroglio: Ruling reserved for next week

By Naheed Patel, CNBC-TV18:

Today was the final day of hearing of the Vodafone tax case. The Bombay High Court has decided to reserve its judgement for next week.

On the last day of the court session, it all boiled down to a question of whether Vodafone has a capital asset in India? If it does indeed have a capital asset, then it is eligible for tax. The taxman said the joint venture, in which Vodafone has replaced Hutch, is actually a capital asset for which it should be taxed.

Vodafone had purchased shares of the offshore company to gain operational control of an asset in India. They had brought this point out before and reiterated it again today. The original documents between Vodafone and Hutch, which were signed in February 2007, have not been submitted to the court. This could be considered as withholding evidence.

Vodafone on its part said they are willing to submit these documents but they don’t feel the need because the transaction occurred outside the country. They purchased offshore shares but they did admit that the value basis of these offshore shares was an Indian asset.