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Vodafone Judgment - Facts & Analysis


The Supreme Court of India recently pronounced its decision in the controversial USD 2 billion tax dispute in favour of Vodafone. The decision reinforces many of the important international taxation principles, as well as the importance of adherence to the Rule of Law. Taxand India discusses the implications of the pronouncement as presented in a recent webinar.

Decision of the Bombay High Court

  • Essence of the transaction was a change in the 'controlling interest' of HEL, which constituted a source of income in India
  • Transaction had significant nexus with India; hence withholding tax provisions applicable
  • Several other rights transferred besides the CGP share - the consideration should be allocated over such rights also

Taxand India provides a considered analysis of the Vodafone case and the Supreme Court ruling (PDF)

Taxand's Take

This landmark ruling reinforces many historically established canons of taxation, provides a stamp of approval to international holding company structures and the modern trends of contractual rights built in shareholders' agreements. The judgment will help address several contentious issues including those with respect to scope of tax planning, applicability of anti avoidance rules, issues regarding situs of shares and applicability of withholding tax provisions.

Your Taxand contact for further queries is:
Mukesh Butani
T. +91 124 339 5010

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