The following important judgement pronounced *via video-conferencing* is available for download at itatonline.org.
Vodafone International Holdings B.V. vs. UOI (Bombay High Court)<http://bit.ly/VodaFone> *The purchase of shares of a foreign company by one non-resident from another non-resident attracts Indian tax if the object was to acquire the Indian assets held by the foreign company *A *Cayman Island company* called CGP Investments held 52% of the share capital of Hutchison Essar Ltd, an *Indian company* engaged in the mobile telecom business in India. The shares of CGP Investments were in turn held by another *Cayman Island company* called Hutchison Telecommunications. The assessee, a *Dutch company*, acquired from the second *Cayman Islands company*, the shares in CGP Investments for a total consideration of US $ 11.08 billion. The AO issued a show-cause notice u/s 201 in which he took the view that as the ultimate asset acquired by the assessee were shares in an Indian company, the assessee ought to have deducted tax at source u/s 195 while making payment to the vendor. This notice was challenged by a Writ Petition but was dismissed by the Bombay High Court<http://itatonline.org/archives/index.php/vodafone-international-vs-uoi-bombay-high-court/>. In appeal, the Supreme Court<http://itatonline.org/archives/index.php/vodafone-international-vs-uoi-supreme-court/>remanded the matter to the AO to first pass a preliminary order of jurisdiction which the AO did. This order was challenged by the assessee by a Writ Petition on the ground that *as one non-resident had acquired shares of a foreign company from another non-resident, s. 195 had no application*. HELD dismissing the Petition: .... (vii) On facts, the argument that the transaction involved merely a sale of a share of a foreign company by one non-resident to another is not acceptable. *It would be simplistic to assume that the entire transaction between the non-residents was fulfilled merely upon the transfer of a single share of the Cayman Islands company*. The commercial and business understanding between the parties postulated that what was being transferred from one non-resident to the other was the *controlling interest* in Hutchison Essar, an Indian company. *The object and intent of the parties was to achieve the transfer of control over the Indian company and the transfer of the solitary share of the Cayman Islands company was put into place as a mode of effectuating the goal*; *(Click Here To Read More <http://bit.ly/VodaFone>)* Regards, Editor, itatonline.org ------------------** -- CA.RAJESH DHIRAJLAL DESAI "Print this mail only if absolutely necessary. Save Paper. Save Trees." -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
