U.K.-based Vodafone Group on Friday welcomed the Supreme Court's ruling to set aside the Bombay High Court judgment, asking its Indian arm to pay Rs.11,000 crore income-tax to the government for acquiring majority stake in Hutchison-Essar in 2007.
Meanwhile, Finance Minister Pranab Mukherjee met Law Minister Salman Khurshid to discuss the apex court order, while the Central Broad of Direct Taxes (CBDT) constituted a ‘core committee' to prepare future strategy on its financial implications. Notably, the Income-tax Department has been directed to return Rs.2,500 crore deposited by Vodafone International Holdings along with 4 per cent interest.
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“The Vodafone Group has maintained consistently throughout the legal proceedings that this transaction was not taxable. We are pleased with the judgment in the Supreme Court,” Vodafone said in a statement. “We are a committed long-term investor in India and we have made clear all along that we have faith in the Indian judicial system. We welcome the Supreme Court's decision, which underpins our confidence in India. We will continue to grow our Indian business - including making significant investments in rural areas and in 3G network coverage,” said Vodafone Group Chief Executive Vittorio Colao.
Following the court order, the Centre also swung into action. “Right now we only know that it is a unanimous judgement that has gone against the revenue authorities...we still have to read the judgement, analyse and examine. We obviously need revenue for government's important programmes and the other thing is the certainty in law — we have to examine both areas,” Mr. Khurshid told reporters after meeting Mr. Mukherjee.
Meanwhile, India Inc has welcomed the ‘landmark' verdict. “It will enhance the trust of the international investors in the Indian judicial system and the strong institutional fundamentals underlying the Indian economy. This decision will re-inject confidence in cross-border mergers and acquisitions and will further augment the FDI coming to India,” FICCI Secretary General Rajiv Kumar said in a statement.
Similarly, KPMG Deputy CEO and Chairman (Tax) Dinesh Kanabar said the judgment was ‘path breaking' that augurs well for foreign investments in India. “It would send a clear message to the international investing community about the supremacy of the rule of law in India,” said Indo-American Chamber of Commerce National President Anand Desai.