British mobile telecommunications company Vodafone (NASDAQ: VOD ) was let off
the hook for a massive, $4.4 billion bill issued by Mumbais high court. This
move, made by Indias Supreme Court, absolved Vodafone of a $4.4 billion bill in
penalties and back taxes and will hopefully remove many uncertainties foreign
companies may have with investing in India in the future. The dispute began in
May 2007 when Vodafone International Holdings BV Vodafones Dutch subsidiary
gained a 67% stake in a Cayman Islands company called CGP Investments Ltd. This
company held the Indian telecom assets of Hutchison Telecommunications another
2007 acquisition. With this in mind, Mumbais high court decided the indirect
transfer of Indian assets during the deal, which accrue revenue in India, made
Vodafone liable for taxation. However, Vodafone vehemently argued that because
the deal took place between two foreign entities, no tax should be owed to
India. As it turned out, Indias Supreme court agreed with Vodafones argument,
thus providing much relief to at least six other companies facing similar
litigation:
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