ZOOZOO WINS THE TAX BATTLE!

Supreme Court’s verdict in Rs.11,000 crore Vodafone case

A big shot in the arm for global investment in India!

              One of the most sensational cases ever, in the history of Indian Income-tax, came to be decided by the Supreme Court on January, 20, 2012. The Vodafone ruling, involving a mammoth tax stake of around Rs.11,000 crores, which has been delivered in favour of the taxpayer and against the  revenue assumes great significance, since it has also reinforced the faith of the global investor community in the Indian judicial system.

THE BIG TAX CONTROVERSY

               The core controversy before the Apex Court was whether India could tax capital gains arising from sale of shares of overseas companies, merely because such companies had downstream subsidiaries in India. The tax authorities had contended that the sale of the share capital of a Cayman Islands company that ultimately held approximately 67 per cent in Hutchison Essar (now Vodafone Essar) gave rise to capital gains tax liability in India, and therefore, Vodafone was required to deduct tax on payments made to Hutchison for acquiring the shares. In response, Vodafone argued that the transaction was not taxable in India and that the Indian income-tax authorities did not have jurisdiction to proceed against them for any alleged failure to withhold tax. (more…)