Friday, January 20, 2012
Victory : Vodafone stand vindicated
The supreme court of India has ruled in favour of Vodafone, in what could be seen as a pivotal judgement in the area of merger and acquisition. In 2007 Vodafone acquired 67% stake in the erstwhile Hutchinson Essar company. The deal was valued at around 55,000 crores. The income tax department argued that though the deal took place between two foriegn companies, it had to be taxed as the assets were located in India. But Vodafone maintained that Income tax department has no such jurisdictions over foreign companies making such deals. The Vodafone which lost the case in Mumbai high court had approached Supreme court challenging the 12,000 odd crores imposed on it by the income tax department. Vodafone had also deposited around 2800 crores and had deposited surity of the remaining. The court ruling has vindicated the stand of Vodafone. Now that the supreme court has ruled this in favour of foreign company, the impact on similar cases will be huge. The government might be mulling over other options for meeting revenue targets.