- (1.) Leave granted. Introduction
(2.) This matter concerns a tax dispute involving the Vodafone Group with the Indian Tax Authorities [hereinafter referred to for short as the Revenue ], in relation to the acquisition by Vodafone International Holdings BV [for short VIH ], a company resident for tax purposes in the Netherlands, of the entire share capital of CGP Investments(Holdings) Ltd. [for short CGP ], a company resident for tax purposes in the Cayman Islands [ CI for short] vide transaction dated 11.02.2007, whose stated aim, according to the Revenue, was acquisition of 67% controlling interest in HEL , being a company resident for tax purposes in India which is disputed by the appellant saying that VIH agreed to acquire companies which in turn controlled a 67% interest, but not controlling interest, in Hutchison Essar Limited ( HEL for short). According to the appellant, CGP held indirectly through other companies 52% shareholding interest in HEL as well as Options to acquire a further 15% shareholding interest in HEL, subject to relaxation of FDI Norms. In short, the Revenue seeks to tax the capital gains arising from the sale of the share capital of CGP on the basis that CGP, whilst not a tax resident in India, holds the underlying Indian assets. Facts A. Evolution of the Hutchison structure and the Transaction
(3.) The Hutchison Group, Hong Kong (HK) first invested into the telecom business in India in 1992 when the said Group invested in an Indian joint venture vehicle by the name Hutchison Max Telecom Limited (HMTL) later renamed as HEL.;