Mumbai: Telecom major Videsh Sanchar Nigam (VSNL) could witness a major tax outgo following an order of the Income Tax Apellate Tribunal (ITAT) which denied its claim for tax exemption for a telecom project.
While company sources estimate the outgo at Rs17 crore, for which provisions have been made, reports suggest that the sum could go up to Rs1,000 crore if the order is binding for subsequent years.
A three-member bench of ITAT has said the company was liable to pay tax on an income of Rs2,090 crore earned between 1995 and 2006. The order disallowed VSNL’s claim of deduction for this sum under Section 80-IA of the Income Tax Act, which deals with exemptions for telecom projects.
The bone of contention between the Income Tax Department and VSNL was whether commissioning a satellite earth station could be provided tax exemption.
Though the order reportedly was only for the assessment year 1996-97, the three-member bench’s conclusion could be binding for the subsequent years also, unless the Bombay High Court reverses the order.
When contacted, a VSNL spokesman said, “VSNL is yet to receive the order and hence it would be premature to discuss the matter. VSNL confirms that the year for which the order is expected, the company will not have any financial impact.”
The ITAT officials were not immediately available for comments.