A bench comprising Chief Justice SH Kapadia and Justice KS Radhakrishnan dismissed the Centre's review petition in the Vodafone tax case during an in-chamber proceeding, In the petition, the Centre contended there was a need for reconsidering the Jan 20 verdict as the law on deciding the case involving the telecom major has not been correctly interpreted.
It had raised several points to contend that the verdict was erroneous. The court had given the verdict allowing Vodafone's appeal and had quashed the Bombay High Court verdict which had upheld the decision to levy tax on the overseas deal.
After the review petition was filed on Feb 17, the government in its Mar 16 budget proposed to amend the Income Tax Act to levy capital gains tax on domestic asset acquisition through merger and acquisition deals involving foreign companies.
Finance Minister Pranab Mukherjee in the budget indicated amendments in direct tax laws with retrospective effect to allow the government to tax income "accruing or arising directly or indirectly through the transfer of capital asset situated in India". The apex court had also held that Vodafone's transaction with Hong Kong-based Hutchison Group was a "bonafide" FDI which fell outside the tax jurisdiction of the Indian authorities.