Vodafone vindicated in Indian tax case

Bombay’s High Court has ruled in Vodafone’s favour regarding the operator’s long-running tax dispute that arose following its purchase of Hutchison-Essar.

Vodafone acquired the unit - which it rebranded as Vodafone India - in 2007. It has since been pursued by the Indian tax authorities for a bill of INR85 billion ($1.31 billion) relating to a transfer pricing case from 2008. The Income Tax Appellate Tribunal previously declared that this levy was lawful; however that order has now been dismissed by the Bombay High Court.

Fereshte Sethna, senior partner at DMD Advocates – Vodafone India’s legal representation – said: “The verdict reaffirms justice for Vodafone and is an excellent signal for foreign investors.”

However, this is not the only legal case that Vodafone faces in India. An issue regarding the capital gains from its purchase of Hutchison-Essar is now being taken to international arbitration, while in April the Indian tax department demanded that the operator resubmit its 2009-10 tax return for further assessment.

A further tribunal ruled in December 2010 that the Indian tax authorities were justified in demanding INR85 billion in tax from Vodafone due to issues of transfer pricing related to the sale of its call centre unit.

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