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BW Businessworld

A $2.5bn Win

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The judgement by the three-judge bench of the Supreme Court led by Chief Justice S.H. Kapadia could be a major milestone in mergers and acquisitions for foreign entities with India assets. The bench set aside a Bombay High Court ruling that Indian tax authorities could seek taxes worth $2.5 billion (Rs 11,200 crore) from Vodafone International on its purchase of a 67 per cent stake in Hutchison Essar for $11.2 billion in 2007. Its  argument was that it was an overseas transaction between companies incorporated outside India.

The verdict will provide the required level of comfort to foreign investors who had been following the Vodafone case very closely. This was clearly evident in the statement issued by Vodafone CEO Vittorio Colao: "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," he said in a press release.

This judgement could be a precedent for some other cases that are in the courts. SABMiller, Sanofi and Vedanta are fighting similar tax cases in India.

STRICTLY BUSINESS

China has become an urban phenomenon. According to latest figures of National Bureau of Statistics, the world's most populated country has 690.79 million people in urban areas and 656.56 million in the countryside.

(This story was published in Businessworld Issue Dated 30-01-2012)