In a landmark judgement, the Supreme Court has ruled that tax office has no jurisdiction to tax Vodafone's 2007 India acquisition.
In a landmark judgement, the Supreme Court has ruled that tax department has no jurisdiction to tax Vodafone's 2007 India acquisition.
The world's largest mobile operator by revenue has said it believes Indian tax department 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.
SC has also ordered Rs 2500 crore to be returned to Vodafone with interest. It said this was a bonafide FDI case to which Section 195 did not apply.
The apex court turned down the 'extinguishment of rights' argument. According to experts, this implies there is no transfer of assets, which means, levying capital gains tax will not be applicable to Hutch-Vodafone transaction.
In its statement, Vodafone Group said, "The Court has concluded that Vodafone had no liability to account for withholding tax on its acquisition of interests in Hutchison Essar Limited (now Vodafone India Limited) in 2007."
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