Vodafone not liable to pay Rs 11,297-cr tax: Apex court

by Arun S.
source;Hindubusinessline

Transaction between two overseas firms falls outside tax jurisdiction

New Delhi, Jan 20:
In a huge relief to Vodafone and a major boost to foreign investor confidence in India, the Supreme Court on Friday held in a landmark verdict that the telecom giant is not liable to be taxed on its $11.2-billion acquisition of Hutchison’s Indian telecom assets.

The Income Tax (I-T) Department had raised a demand of $2.6 billion (Rs 11,297 crore) on the 2007 Vodafone-Hutch deal.

The apex court directed the I-T Department to return to Vodafone Rs 2,500 crore (which was deposited by the company as directed by the apex court) with 4 per cent interest within two months from Friday. The Bench headed by the Chief Justice of India, Mr S H Kapadia, also asked the Supreme Court Registry to give back to Vodafone the bank guarantee of Rs 8,500 crore within four weeks.

The “Offshore Transaction herein is a bona fide structured Foreign Direct Investment into India which fell outside India’s territorial tax jurisdiction, hence not taxable,” the court said.