The Indian government has said it will start examining the tax liability of two Loop Telecom’s former shareholders regarding a transfer of ownership, according to local reports.
During the assessment year 2008/2009, BPL Mobile Communications and BPL…
The Indian government has said it will start examining the tax liability of two Loop Telecom’s former shareholders regarding a transfer of ownership, according to local reports.
During the assessment year 2008/2009, BPL Mobile Communications and BPL Communications – two subsidiaries of Indian electronics company British Physical Laboratories Group (BPL) – held 51% and 49%, respectively, of cellco Loop Telecom.
But the shareholding pattern reportedly changed during the assessment year 2009/2010, with the new holders being Capital Global (23.96%), Loop Mobile Holdings India (21.09%) and Loop Mobile (India) (51.95%).
This means that capital gains tax should arise, although the liability is yet to be calculated since the assessment in the case is pending, junior Finance Minister S. S. Palanimanickam reportedly told parliament.
Loop and BPL could not be reached for comment before going to press.
Another company, Vodafone International, is also facing a capital gains tax bill for its US$11.2bn purchase of Hutchinson Essar in 2007. The Dutch subsidiary of British mobile phone company Vodafone appealed to the Supreme Court. A final hearing on the case has been set for 24 February.
“The Vodafone case will definitely be a test case for future transactions. Press reports suggest that there are around 400 similar deals under the spotlight, with some of these being examined by tax authorities and others being litigated at various levels. The judgment may provide fillip to tax authorities’ investigations,” Ravishankar Raghavan, a principal in the Tax Group at Indian law firm Majmudar, told TelecomFinance.
