Vodafone Case by Taxsutra

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21.08.2019-756 views -Vodafone Case by Taxsutra

 Essay upon Vodafone Case by Taxsutra



Vodafone's $2bn tax circumstance

Summary of Supreme Court docket Proceedings

In Feb ., 2007 Vodafone (through its Netherlands entity) entered into a with Hutchison Telecommunications Foreign Limited, Cayman Islands (‘HTIL'), to get acquisition of 66. 9848% equity and pursuits in the Of india telecom business of Hutchison Essar Ltd. (hereinafter referred to as ‘HEL'). The total value of the transaction was $ 10. 206 billion. [pic]

The IT Department supposed that Vodafone (Netherlands), the customer, had did not deduct Indian tax around the payment of consideration made to HTIL and a show cause notice was issued to Vodafone BACTERIAL VAGINOSIS in Sept 2007 pertaining to failure to withhold duty.

Bombay High Court docket, in September 2010, disregarding the writ petition submitted by Vodafone, held that share transfer had a significant nexus with India. HC also organised that " The importance of the purchase was a change in the handling interest in HEL which constituted a source of income in India. The transaction between the functions covered inside its spread around, diverse rights and entitlements. The Petitioner (Vodafone) by the diverse negotiating that it created has a nexus with Indian jurisdiction. During these circumstances, the proceedings which have been initiated by the Income Tax Specialists cannot be held to shortage jurisdiction. ”

Accordingly, Bombay High Courtroom has organised that the share transfer by Cayman enterprise is liable to tax in India. The whole tax effect of the transaction is over Rs 11, 000 cr.

Vodafone offers filed an appeal prior to the Supreme Courtroom against Bombay High Court decision. A 3 assess bench of Supreme Court docket led simply by Chief Proper rights SH Kapadia, began hearings in Vodafone case from August third, 2011.

Vodafone Counsel, Ex - Solicitor Standard Harish Salve has argued for 18 days above 7 weeks. Solicitor Standard Rohinton Nariman, argued on behalf of the Income-tax department to get 6 days.

Taxsutra. com continues to be covering daily proceedings in Supreme Courtroom since previous 2 a few months. This synopsis has been ready to provide an summary of the key fights presented by simply Vodafone and Income-tax Division before the Substantial Court (upto September 29th, 2011). The hearings are likely to get over by simply October end. To read the blow simply by blow accounts of each day's proceedings, generously visit Taxsutra. com


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Summary of arguments by Vodafone counsel Harish Hagel

‘Situs' of CGP shares outside India but not taxable under Sec 9 • Securities and exchange commission's 9 (1)(i) allows taxation of profits deemed to accrue or perhaps arise in India throughout the transfer of any capital advantage 'situated in India'. It really is abundantly clear from the dotacion that the capital asset should be 'situated in India'. • Letter of law ought to be strictly interpreted and hence, transfer of a capital asset (in Hutch-Vodafone circumstance, Cayman Area company's shares) situated exterior India, falls outside the ambience of Securities and exchange commission's 9(1)(i). • Source of income lies where the transaction is affected and not wherever...