The income-tax department has slapped a unit of billionaire Li Ka-shing's CK Hutchison Holdings with a penalty of Rs 7,900 crore. The penalty is on a tax demand of the same amount over a 2007 deal in which it had sold it's India mobile phone business to Vodafone Group Plc.

In a filing to the Hong Kong stock exchange, the company said its unit Hutchison Telecommunications International had late last year received a tax demand notice of Rs 7,900 crore and on August 9 a penalty order of a similar amount. The CK Hutchison unit continued to dispute the validity of those taxes, it said.

Hutchison Telecom, an indirect wholly owned subsidiary of CK Hutchison Holdings, had received a draft assessment order dated November 24, 2016, from India's tax authorities on "the alleged gains" made in the 2007 deal with Vodafone. Reliance Jio To Offer Phone For Free; Announces New Cable TV Device

The tax department on January 25 this year issued the final assessment seeking Rs 7,900 crore in taxes on capital gains made in the Rs 16,430-crore deal.

Now, the tax department has by an order dated July 3 imposed "a penalty of approximately Rs 7,900 crore". The company said "taxes cannot be validly imposed" as the tax demand order, passed on "the basis of retrospective legislation seeking to overturn the Supreme Court's January 2012 judgment that the acquisition was not taxable in India, is in violation of the principles of international law".

"Accordingly, the company continues to believe that the tax orders would not have any effect on the company's financial condition or the results of its operations for any period," it said.

Vodafone had in 2007 acquired a 67 per cent stake in the mobile phone business owned by Hutchison Whampoa, now part of CK Hutchison.