This document summarizes a case study involving Vodafone's acquisition of Hutch Essar Limited (HEL) in India through a series of transactions with intermediate companies in Mauritius and the Cayman Islands. The Income Tax Department argued that capital gains tax should have been paid in India on the transaction. The Bombay High Court initially agreed with the tax department. However, the Supreme Court later overturned this decision, finding that the transaction did not involve the transfer of a capital asset situated in India and thus was not taxable.
VODAFONE TAX CASE | VODAFONE HUTCH CASE | VODAFONE TAX CASE STUDYSonalS15
The Vodafone Tax Case is one of the most controversial Tax dispute in the history of Indian Income Tax Law.
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VODAFONE TAX CASE | VODAFONE HUTCH CASE | VODAFONE TAX CASE STUDYSonalS15
The Vodafone Tax Case is one of the most controversial Tax dispute in the history of Indian Income Tax Law.
FOR FREELANCE POWERPOINT PRESENTATIONS ON ANY TOPIC, MAIL ME AT sonalkumari8991@gmail.com
A study on Vijay Mallya Scam Case: Vijay Vittal Mallya, once known to you and me as ‘The King of Good Times’ or also dubbed ‘ The playboy of the East’ was born to the Indian Entrepreneur Vittal Mallya in 1955. Vittal Mallya was largely known for the role played as the director of United Breweries (UB) Group which he achieved at the age of 23. Following his father’s sudden demise Vijay Mallya became chairman of the UB Group.Vijay Mallya was always known for his flamboyant and posh lifestyle. A testament to these were the lavish New Year Parties at his Kingfisher Villa in Goa or the birthday bashes thrown on his luxurious Yacht ‘ The Indian Empress’.
KARVY STOCK BROKING LIMITED FRAUD, WHO ALL WERE INVOLVED IN THE SCAM, why the scam happened, how it was discovered, who discovered it, what were the replications of it, what happened after the scam, what actions were taken by the government,
SCRAPPING OF RETRO TAX PROVISIONS : A REVIVAL OF OVERSEAS INTEREST IN INDIADVSResearchFoundatio
Key Takeaways:
- Scrapping of Restrospective effect of Taxation
- Indirect transfer of assets not taxable before 28th May 2012
- Vodafone case analysis
- Draft notification to implement the amendment
A study on Vijay Mallya Scam Case: Vijay Vittal Mallya, once known to you and me as ‘The King of Good Times’ or also dubbed ‘ The playboy of the East’ was born to the Indian Entrepreneur Vittal Mallya in 1955. Vittal Mallya was largely known for the role played as the director of United Breweries (UB) Group which he achieved at the age of 23. Following his father’s sudden demise Vijay Mallya became chairman of the UB Group.Vijay Mallya was always known for his flamboyant and posh lifestyle. A testament to these were the lavish New Year Parties at his Kingfisher Villa in Goa or the birthday bashes thrown on his luxurious Yacht ‘ The Indian Empress’.
KARVY STOCK BROKING LIMITED FRAUD, WHO ALL WERE INVOLVED IN THE SCAM, why the scam happened, how it was discovered, who discovered it, what were the replications of it, what happened after the scam, what actions were taken by the government,
SCRAPPING OF RETRO TAX PROVISIONS : A REVIVAL OF OVERSEAS INTEREST IN INDIADVSResearchFoundatio
Key Takeaways:
- Scrapping of Restrospective effect of Taxation
- Indirect transfer of assets not taxable before 28th May 2012
- Vodafone case analysis
- Draft notification to implement the amendment
TransPrice Times 15 December 2015 - 12 January 2016Sangesh Sase
Dear Readers,
Please find a link to the first edition of TransPrice Times for the new year 2016.
With the onset of holiday season, we saw some important judgement being pronounced by courts which are summarized in the alert.
Further, a long awaited guidance from the CBDT on the change in the residential status law which included the a global concept of 'Place of Effective Management' ('POEM') is also covered in the alert.
We hope you find this newsletter useful and look forward to your feedback and suggestions. You can write to us at akshaykenkre@transprice.in
Happy Reading!!!
TransPrice Times 15 December 2015 - 12 January 2016Akshay KENKRE
Dear Readers,
Please find a link to the first edition of TransPrice Times for the new year 2016.
With the onset of holiday season, we saw some important judgement being pronounced by courts which are summarized in the alert.
Further, a long awaited guidance from the CBDT on the change in the residential status law which included the a global concept of 'Place of Effective Management' ('POEM') is also covered in the alert.
We hope you find this newsletter useful and look forward to your feedback and suggestions. You can write to us at akshaykenkre@transprice.in
Happy Reading!!!
Dear Patron,
Here we are with the Thirty forth successive issue of our monthly ‘Missive’.
We trust you will enjoy reading this Missive, even while soaking in the contents. We would very much appreciate your feedback which consistently helps us in improving and upgrading the contents.
Thanks and regards,
Knowledge Management Team
This presentation covers benefits of filing income tax return even if your income is below taxable slab. There are many benefits of filing NIL returns as well so make sure to file your income tax return on or before due date , i.e. November 30, 2020
Benefits of filing income tax return before due dateJayesh Alwani
Benefits of filing income tax return before due:
As per section 139(1) of Income Tax Act,1961, every person being a company or a firm; or being a person other than a company or a firm, if his total income is above the the maximum amount which is not chargeable to income-tax, he will have to furnish a return of his income.
Here are the benefits of filing income tax return on or before due date.
Important Income Tax Updates:
The Government has notified income tax return (ITR) forms for taxpayers for filing returns for assessment year AY 2020-21.
We have summaries the important GST dates and the forms applicable under GST regime including relaxations given by government considering COVID19:
1 DUE DATES OF RETURN FILING GSTR 3B
2 INTEREST LIABILITY FOR FILING FORM GSTR-3B
3 DUE DATES OF FILING RETURNS
4 OPT IN FOR COMPOSITION IN FY 2020-21
5 Recommendation of 40th GST Council Meeting dated 12th June 2020
NATURE, ORIGIN AND DEVELOPMENT OF INTERNATIONAL LAW.pptxanvithaav
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The slides was well structured along with the highlighted points for better understanding .
Car Accident Injury Do I Have a Case....Knowyourright
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In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
Introducing New Government Regulation on Toll Road.pdfAHRP Law Firm
For nearly two decades, Government Regulation Number 15 of 2005 on Toll Roads ("GR No. 15/2005") has served as the cornerstone of toll road legislation. However, with the emergence of various new developments and legal requirements, the Government has enacted Government Regulation Number 23 of 2024 on Toll Roads to replace GR No. 15/2005. This new regulation introduces several provisions impacting toll business entities and toll road users. Find out more out insights about this topic in our Legal Brief publication.
ALL EYES ON RAFAH BUT WHY Explain more.pdf46adnanshahzad
All eyes on Rafah: But why?. The Rafah border crossing, a crucial point between Egypt and the Gaza Strip, often finds itself at the center of global attention. As we explore the significance of Rafah, we’ll uncover why all eyes are on Rafah and the complexities surrounding this pivotal region.
INTRODUCTION
What makes Rafah so significant that it captures global attention? The phrase ‘All eyes are on Rafah’ resonates not just with those in the region but with people worldwide who recognize its strategic, humanitarian, and political importance. In this guide, we will delve into the factors that make Rafah a focal point for international interest, examining its historical context, humanitarian challenges, and political dimensions.
ASHWINI KUMAR UPADHYAY v/s Union of India.pptxshweeta209
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on the issue of UNIFORM MARRIAGE AGE of men and women.
Military Commissions details LtCol Thomas Jasper as Detailed Defense CounselThomas (Tom) Jasper
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WINDING UP of COMPANY, Modes of DissolutionKHURRAMWALI
Winding up, also known as liquidation, refers to the legal and financial process of dissolving a company. It involves ceasing operations, selling assets, settling debts, and ultimately removing the company from the official business registry.
Here's a breakdown of the key aspects of winding up:
Reasons for Winding Up:
Insolvency: This is the most common reason, where the company cannot pay its debts. Creditors may initiate a compulsory winding up to recover their dues.
Voluntary Closure: The owners may decide to close the company due to reasons like reaching business goals, facing losses, or merging with another company.
Deadlock: If shareholders or directors cannot agree on how to run the company, a court may order a winding up.
Types of Winding Up:
Voluntary Winding Up: This is initiated by the company's shareholders through a resolution passed by a majority vote. There are two main types:
Members' Voluntary Winding Up: The company is solvent (has enough assets to pay off its debts) and shareholders will receive any remaining assets after debts are settled.
Creditors' Voluntary Winding Up: The company is insolvent and creditors will be prioritized in receiving payment from the sale of assets.
Compulsory Winding Up: This is initiated by a court order, typically at the request of creditors, government agencies, or even by the company itself if it's insolvent.
Process of Winding Up:
Appointment of Liquidator: A qualified professional is appointed to oversee the winding-up process. They are responsible for selling assets, paying off debts, and distributing any remaining funds.
Cease Trading: The company stops its regular business operations.
Notification of Creditors: Creditors are informed about the winding up and invited to submit their claims.
Sale of Assets: The company's assets are sold to generate cash to pay off creditors.
Payment of Debts: Creditors are paid according to a set order of priority, with secured creditors receiving payment before unsecured creditors.
Distribution to Shareholders: If there are any remaining funds after all debts are settled, they are distributed to shareholders according to their ownership stake.
Dissolution: Once all claims are settled and distributions made, the company is officially dissolved and removed from the business register.
Impact of Winding Up:
Employees: Employees will likely lose their jobs during the winding-up process.
Creditors: Creditors may not recover their debts in full, especially if the company is insolvent.
Shareholders: Shareholders may not receive any payout if the company's debts exceed its assets.
Winding up is a complex legal and financial process that can have significant consequences for all parties involved. It's important to seek professional legal and financial advice when considering winding up a company.
1. A Case Study
VODAFONE V/S INCOME
TAX AUTHORITY
S Gautam & Associates
2. The case examines one of the largest merger and
acquisition deals in India, how, Vodafone, one of the
world’s largest mobile telecommunications company gained
control over Indian Telecom Company Hutch Essar
through intermediate companies situated in Mauritius
(Cayman Islands).
The company Involved in this Case are as Follows:
1. Vodafone Group Plc (London)
2. Vodafone International Holdings BV (Netherlands) Subsidiary of
Vodafone Group Plc.
3. Hutchison Telecom International Ltd.(Hong Kong)
4. CGP Investments Holdings Ltd.(Mauritius)
5. Hutchison Essar Ltd.(India)
3. Corporate Structure
Vodafone Group Plc:
Vodafone Group Plc incorporated in London (England )is one
of the world's leading mobile telecommunications company.
It is world’s Fourth largest mobile operator in terms of
subscribers and largest in terms of revenue.
The Company's ordinary shares are listed on the London
Stock Exchange and the Company's American Depositary
Shares ('ADSs') are listed on the NASDAQ Stock Market.
The Company had a total market capitalization of
approximately £71.2 billion at 12 November 2009.
4. Corporate Structure
Hutchison Whampoa:
Hutchison Whampoa Limited (HWL) of Hong Kong is a
Fortune 500 company and one of the largest companies
listed on the Hong Kong Stock Exchange.
Hutchison deals in the businesses of ports and related
services, property and hotels, retail, energy, infrastructure ,
investments and telecommunications.
It belongs to the Cheung Kong Group and employs around
2, 20,000 people worldwide.
Flagship companies include Hutchison Port Holdings, H W
Properties, Cheung Kong Infrastructure and Hutchison
Telecommunications International Ltd.(HTIL)
5. Corporate Structure
CGP Investments Holding :
CGP Investment Holdings Limited , is type of SPV
Situated in Cayman Island , Owned by HTIL (Hong Kong).
CGP holds the controlling interest of Hutchison Essar
(Indian ).
CGP Holds directly 61.95 % shares and indirectly 5.05 %
shares through other subsidiary .
6. Corporate Structure
Essar Group:
The Essar Group is a multinational conglomerate Corporation
in the sectors of Steel, Energy, Power, Communications,
Shipping Ports & Logistics as well as Construction
headquartered at Mumbai, India.
Essar is managed by Shri Shashi Ruia, Chairman – Essar
Group and Shri Ravi Ruia, Vice Chairman Essar Group.
Essar began as a construction company in 1969 and diversified
into manufacturing, services and retail.
Essar has its foot print over Asia , Africa, Europe and the
America, and employs more than 50,000 people across the globe.
7. Corporate Structure
Hutchison Essar:
Hutchison Essar Ltd. (“Hutch India”), a company incorporated in
India in 1994.
It was a joint venture of the Hong Kong-based Hutchison
Telecommunications International Ltd and the India-based Essar
Group.
Hutch India was in the business of providing tele communications
service in India.
It covers twenty three telecom circles in India and is based in
Mumbai.
In Hutchison Essar, 66.9848% shares were held by CGP
Investments (Holdings) Ltd, directly 61.95 % and Indirectly
through other subsidiary 5.05% and Remaining 33.0152% were
held by Essar Group of Companies.
8. Hutchison Telecom
International Ltd
(Hong Kong)
CGP
Investments
Holdings
Ltd.
(Maurutius)
Hutchison Essar Ltd
(Indian Co.)
Diagrammatic View
Holding 67 %
Shares in HEL
Essar Group
Ltd(India)
Holding 33
% in HEL
9. Facts of the Case
On February 11, 2007, Vodafone agreed with HTIL to
acquire the controlling interest of CGP Investments holdings
Ltd for US$ 18.8 billion. Out of which Value of Hutch-Essar
was US$11.1 billion . The Transaction closed on May 8,
2007.
Despite the Official name Being Vodafone Essar , its
products are simply branded “Vodafone”
As a result of this sale, capital gains, estimated at $ 2 billion
accrued to CGP Investment Holdings
Considered from the point of view of jurisdictions, it is clear
that the sale transaction took place between the Dutch SPV
(owned by a UK group) and the Cayman Islands SPV (owned
by a Hong Kong company).
10. Understanding the fact of the Case Diagrammatically
Vodafone Group
plc (London)
HTIL (Hong Kong)100%
Holding in CGP
(Mauritius)
CGP Investments
Holding 67 % in
Hutchison Essar
Ltd.(India)
Hutchison Essar
Ltd (Indian Co.)
Vodafone Essar
Ltd. (Indian Co)
Turned To
Vodafone
International
Holdings BV
(Netherlands)
11. Definition of “Income”
Section 9(1)(i) define Income as ,
“all income accruing or arising, whether directly or indirectly,
-through or from any business connection in India, or
-through or from any property in India, or
-through or from any asset or source of income in India, or
-through the transfer of a capital asset situated in India.”
Definition of “Capital Assets”
Section 2(14) defines capital assets in IT act .
As per this section , capital assets means Property of any kind
held by an assessee whether or not connected with his business or
profession .
12. Assessing Officer’s Appeal
Since the deal was offshore, neither party thought it was
taxable in India. But the tax department disagreed. It claimed
that on capital gains ,Tax should have been deducted by
Vodafone while paying Hutchison.
The Income Tax Department has claimed capital gains under
Section 9(1) (i) of the Income Tax Act as it is of the view that the
transaction involved transfer of an Indian Asset and that the
profit made by HTIL from the sale of shares to Vodafone was
generated in India.
Therefore, Vodafone had an obligation to pay withholding tax
u/s 195 (1) in India before making payment of purchase price to
HTIL.
13. Continued…….
Transfer of rights in HEL (India) via CGP Investment
Holding Ltd . CGP Investment Holding Ltd. Is merely
created to take benefits of Tax Heavens in Cayman Island
(Mauritius).
As Capital gains arise on transfer of shares are exempt in
Mauritius.
But if we consider a concept a Substance over Form,
which clearly depicts that substance of a transaction is to
transfer the rights in HEL Situated In India.
14. Understanding the fact of the Case Diagrammatically
Vodafone Group
plc (London)
HTIL (Hong Kong)100%
Holding in CGP
(Mauritius)
CGP Investments
Holding 67 % in
Hutchison Essar
Ltd.(India)
Hutchison Essar
Ltd (Indian Co.)
Vodafone Essar
Ltd. (Indian Co)
Turned To
Vodafone
International
Holdings BV
(Netherlands)
15. Bombay High Court Decision
On 08 September 2010 ,It was held that appeal done by CIT is
up to the mark Because of the following reasons:
As the purpose of entering into agreement is to acquire the
controlling interest ,which HTIL (Foreign Co.) had in
HEL(Indian Co.) and as acquired (controlling interest) by
Vodafone International .
Income Tax Reference : Income Shall be deemed to be accrued
or arise in India U/s 9(1)(i).
16. Definition of “Income”
Section 9(1)(i) define Income as ,
“all income accruing or arising, whether directly or indirectly,
-through or from any business connection in India, or
-through or from any property in India, or
-through or from any asset or source of income in India, or
-through the transfer of a capital asset situated in India.”
Definition of “Capital Assets”
Section 2(14) defines Capital Assets in IT act .
As per this section , capital assets means Property of any kind
held by an assessee whether or not connected with his business or
profession .
17.
18.
19. Assessee’s Explaination
If today you buy 10% of the shares of a particular company, let
us say Jet Airways, does this mean that you automatically own
10 % of all of Jet Airways assets ?
Does this mean that 10 % of the entire fleet of aircraft now
belongs to you ? by buying out a company that holds 67 % of
HEL , it doesn’t mean that Vodafone know owns 67 % of assets
of HEL.
Those assets continue to belong to HEL , which is a Separate
legal entity based in India .
20. Assessee’s Defend Diagrammatically Explained
Vodafone
International
Holding BV
(Netherlands)
CGP Investments Holding
67 % in Hutchison Essar
Ltd.(India)
Hutch Essar Ltd.
(Indian Co.)
Vodafone’s Defend
By Becoming
holding Co. of
CGP it doesn’t
means that
I(Vodafone) holds
67 % of all assets in
HEL (Indian Co.)
21. Supreme Court decision
Vodafone filed a review petition in Supreme court in 20,January, 2012.
Supreme Court Reversed the decision of Bombay High Court Because :
Assessing officer had no jurisdiction to tax the foreign transactions, as
sale of shares in Cayman island.
Transfer of shares in CGP doesn’t amount to transfer of Capital assets
situated in India , as per section 9(1)(1) under the 4th limb.
Bombay high court judgment held that transfer of Controlling interest ,
which is not an identifiable or distinct capital assets, independent of
holding of shares and also not covers in Definition of Capital Assets u/s
2(14).
As Capital Assets is not taxable in India , so there is no Question of
Deducting tax at Source u/s 195(1).
22. Tax Deduction at Source U/s 195 (1)
Any Person responsible for Paying to a non –Resident , not being a
Company , or to a Foreign company, any interest (not being interest
on securities) or any other sum chargeable under the provision of this
act being chargeable under the head “Salaries” shall at the time of
credit of such income to the account of the payee or at the time of
payment therof in cash or by the issue of a cheque or draft or by any
other mode which ever is earlier, deduct income tax theron at the rates
in force.
23.
24.
25.
26.
27. CONCLUSION
I, therefore, find it difficult to agree with the conclusions arrived at by
the High Court that the sale of CGP
share by HTIL to Vodafone would amount to transfer of a
capital asset within the meaning of Section 2(14) of the Indian.
Income Tax Act.