Vodafone tax case. Retrospective tax dispute.

1. UNDER THE GUIDANCE OF
DR. SMITA JAPE
PROF. PANKAJ NANDURKAR
Dr V N BEDEKAR INSTITUTE
OF MANAGEMENT STUDIES

2. VODAFONE
TAX CASE
Vodafone V/s Income Tax Department

3. Companies Involved
VODAFONE INT HOLDINGS CGP INVESTMENT HOLDING LTD
HUTCHINSON TELECOM LTD HUTCH ESSAR LTD

4. Income Tax Act
Capital Asset
Section 2 (14) Section 2 (47)
Transfer in relation to
Capital Assets

5. UNDERSTANDING THE ACQUISITION

6. Tax Avoidance & Tax Planning
• Vodafone Holdings International Purchased CGP investment ltd
for a total consideration of 11.2 billion dollars.
• Capital gains estimated at $ 2 billion.
• In September 2007, the tax department issued a show-cause
notice to Vodafone.
• Indirect transfer of assets situated in India.

7. SEPT 2007
₹79,900,000,000cr
AS TAX TO BE PAID

8. BOMBAY
HIGH COURT
2007

9. CGP Holding investment LTD
Argument of VODAFONE
Vodafone argued that transaction took place between
Offshore entities owned by itself and Hutchison and
was outside India jurisdiction.

10. Argument of Tax Authority
The tax Department seeks to show that
the deal was liable to Indian capital gain
tax.
The Vodafone Hutch deal happened out
of country. It was taxable as underline
assets was in India.

11. In favor of
Income Tax Department
The Result

12. SUPREME COURT
2012

13. Income Tax Act,1996
was amended
No incidence of
Capital Gains
Overruled decision of
Bombay High Court

14. Gives the state a power to make a rule on taxing
certain products, items or services and deals
and levy tax on companies even before the date
the Act was passed.
Retrospective Taxation

15. AFTER AMMENDMENT
₹221,000,000,000cr
AS TAX TO BE PAID

16. ARBITRATION
JUDGEMENT
2014

17. The international arbitration proceeding was
initiated by Vodafone International Holdings.
Arbitrational judgement
This involvement of Netherlands can be traced back
to the agreement that Vodafone’s Netherland entity
entered into with Hutchison Telecommunications.
The objective of the agreement is for Promotion
and Protection of Investments.
The court has directed India to reimburse a sum of Rs
40.3 crore (GBP 4.3 Million) to Vodafone.

19. CURRENT SCENERIO
In 2020 the Finance Minister said they
will examine the Arbitration case
In Aug 2021 the new bill
“The taxation law (amendments)
2021” is presented in the Lok Sabha

20. THANK YOU