SC rules in favour of Vodafone in tax case

NEW DELHI (Reuters) - The tax deparment has no jurisdiction over Vodafone's purchase of mobile assets in India, Supreme Court Chief Justice S.H. Kapadia ruled on Friday, in a big relief to the telecom giant that has been fighting a $2.2 billion tax bill in a long-running dispute anxiously watched by foreign investors in India.
Vodafone, fighting the tax bill over its $11 billion deal to buy Hutchison Whampoa Ltd's Indian mobile business in 2007, had appealed to the Supreme Court after losing the case in the Bombay High Court in 2010.
The world's largest mobile operator by revenue has said it believes Indian tax office has no right to tax the transaction between two foreign entities, and even if any tax is to be paid, it should be paid by the seller not the buyer.
Indian authorities have said the deal was liable for tax because most of the assets were based in India and because under local tax law, buyers have to withhold capital gains tax liabilities and pay them to the government.
(Reporting by Devidutta Tripathy; Editing by Ranjit Gangadharan)