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Sunday, January 22, 2012

The Supreme Court has made a historical judgement and ruled in favour of Vodafone in a tax case that was pending since a long time. The court has made a critical judgement stating that the Indian tax department cannot tax the transaction that saw Vodafone acquire 67 per cent stake in Hutchison Essar, a mobile phone operator in India in 2007. The deal was for a staggering Rs.55,000 crores or $11.5 billion. The Court observed that I-T dept has no jurisdiction on transactions outside the country

Further, the Income-Tax Department has been asked to return to Vodafone Rs.2,500 crore which it had earlier paid to the department. The Apex Court has also asked the department to pay the said amount along with 4 per cent interest within two months. Supreme Court Registry has also been asked to return to Vodafone the bank guarantee of Rs.8,500 crore

The case will come as a great relief from legal tangles for Vodafone and would clear the deck for the company's proposed Initial Public Offering (IPO). In several interviews earlier also, Vodafone's global CEO Vittorio Colao had warned that the outcome of the tax case would govern Vodafone's approach to future investment in its India arm

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