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The Income Tax Appellate Tribunal (ITAT) has partially stayed the Rs 2,668-crore tax demand raised against Bharti Airtel.
The demand was made on account of demerger of tower assets to its subsidiary Bharti Infratel.
The said transfer was considered as taxable by the income tax officer and consequently demand of Rs 2,668 crore was raised.
This demand was also confirmed by Commissioner of Income Tax (Appeals), who is the next appellate authority above an assessing officer.
Subsequently, Bharti Airtel had approached ITAT for stay of recovery proceedings.
The tribunal stayed the demand of Rs 2,008 crore and has directed Bharti to pay the balance Rs 600 crore by way of monthly instalments of Rs 100 crore till the matter is heard.
ITAT has fixed the next date of hearing in January 2013.
When contacted Bharti spokesperson said, “While the company has received from the income tax authorities in India a demand for an amount of Rs 2,668 crore for the assessment year 2007-08, it strongly believes as do its external advisors that the demand is baseless and unjustified being contrary to the prevalent tax laws and precedents. The company has challenged the demand and has been granted an interim stay by the Income Tax Tribunal for 75 per cent of the demand.” The case dates back to 2008 when Bharti Infratel was formed as per the demerger scheme wherein Bharti Airtel transferred its towers to Bharti Infratel. According to the tax authorities, Bharti Airtel is liable to pay for this transaction.
Income-tax authorities had in early January this year slapped Rs 1,067 crore notice on Bharti Airtel for allegedly not withholding tax on payments made to international operators (to non-resident mobile operators towards inter-connect charges) for the previous four financial years.
The international taxation unit of the tax department had held that such payments are in the nature of fee for technical services and that tax should have been withheld under the income tax law on such payments.
> thomas.thomas@thehindu.co.in
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