Vodafone decreed to pay Rs 12,000 cr CG tax
The Bombay high court, in a landmark verdict, on Wednesday dismissed a petition filed by the global telecom giant Vodafone International against the Indian income tax department’s power to impose a capital gains tax on its $11 billion-plus acquisition in 2007 of a controlling 67% stake in Hutchison Essar Ltd (HEL). Vodafone will now has to pay $2.6 billion (over Rs 12,000 crore) in CG tax. The court held that that the deal should be subject to Indian capital gains tax because the operating assets of HEL were in India.
The significance of the case lies in the fact that this is the first time an Indian court has ruled on whether Indian tax authorites have jurisdiction over a transaction between two overseas corporate entities concerning a business venture in India.