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Vodafone wins tax case in SC

NEW DELHI: The Supreme Court on Friday set aside a judgment of the Bombay High Court wherein the latter had directed telecom major Vodafone to pay income tax to the tune of Rs 11,000 crore.

Published: 21st January 2012 01:25 AM  |   Last Updated: 16th May 2012 06:18 PM   |  A+A-

NEW DELHI: The Supreme Court on Friday set aside a judgment of the Bombay High Court wherein the latter had directed telecom major Vodafone to pay income tax to the tune of Rs 11,000 crore.

A Bench comprising Chief Justice S H Kapadia, Justice K S Radhakrishnan and Justice Swatanter Kumar held that Vodafone and Hutchison are incorporated outside India and that their transactions are outside India.

So, Indian tax authorities do not have competence and jurisdiction on an overseas transaction.

This is being perceived as a major victory to Vodafone in corporate circles.

Justice K S Radhakrishnan wrote a separate, but concurrent judgment with the findings of the Chief Justice and Justice Swatanter Kumar.

In his verdict, Justice Radhakrishnan felt that Vodafone has no obligation to pay under Section 163, Clause 1C of the Income Tax Act.

In the process, the SC Bench asked the I-T department to return Rs 2,412 crore deposited by Vodafone in compliance of its interim order within two months, along with 4 per cent interest from the date of withdrawal of the money by the I-T department. It also directed the registry of the apex court to return within four weeks the bank guarantee of Rs 8,500 crore given by Vodafone.

The Bombay HC had directed Vodafone to pay a tax of Rs 11,218 crore ($2.5 billion) for acquiring the operations of Hutch Essar in 2007.

Delivering a majority judgment, Chief Justice Kapadia said Indian tax authorities have no jurisdiction over the transactions carried out abroad. He said for the stability of economic operations, investors should know where they stand.



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