The Bombay High Court ruled in favour of Vodafone in an INR85 billion ($1.31 billion) tax dispute over its acquisition in 2007 of Hutchison-Essar, which was later renamed Vodafone India.
The court set aside an order by the Income Tax Appellate Tribunal that had previously ruled that the tax authorities had the power to levy the tax on Vodafone in a transfer pricing case dating back to 2008, the Economic Times reported.
Vodafone, however, continues to face a separate case over the capital gains from the acquisition that is heading to international arbitration.
The Times quoted Fereshte Sethna, senior partner at DMD Advocates, which represents Vodafone India, as saying: “The verdict reaffirms justice for Vodafone and is an excellent signal for foreign investors.”
Vodafone has faced multiple tax issues in India since that purchase. In April it hit another hurdle after the country’s income tax department asked the operator to re-file its 2009-10 tax return for re-assessment.
Last December a tribunal arbitrating a transfer-pricing dispute ruled that the tax authorities have the power to demand the operator pay INR85 billion in tax. The case involved the sale of its call-centre business.