"The demand for tax in the Vodafone case was a result of failing to understand the difference between the sale of shares in a company and the sale of assets of that company."
The demand for tax in the Vodafone case was a result of failing to understand the difference between the sale of shares in a company and the sale of assets of that company. It is an elementary principle of company law that ownership of shares in a company does not mean ownership of the assets of the company. The Hindu : Opinion / Op-Ed : Vodafone is a misunderstood case
The shares owned by Hutchison were sold to Vodafone indirectly purchasing 51 per cent of the share capital of Hutchison Essar Ltd., a company registered in Mumbai. Not a single asset of this Mumbai based company was transferred either in India or abroad. Indeed, there would be no transfer of any asset in India.
Prashant Bhushan responds:
The stated purpose of the sale purchase agreement between Hutch and Vodafone was to transfer the shares, assets and control of the Indian Telecom Company HEL, but they claim to have achieved this by transferring a single share of a Cayman Island-based holding company. This "device" of using the transfer of the Cayman Island company in the bid to avoid Capital Gains tax is clearly a tax avoidance device.
The Hindu : Opinion / Op-Ed : Prashant Bhushan responds: "Tax avoidance devices have been honed to a fine art by clever lawyers and consultants advising such corporations. Unfortunately, in the Vodafone and the Mauritius cases, the court has winked at them instead of frowning upon"
The shares owned by Hutchison were sold to Vodafone indirectly purchasing 51 per cent of the share capital of Hutchison Essar Ltd., a company registered in Mumbai. Not a single asset of this Mumbai based company was transferred either in India or abroad. Indeed, there would be no transfer of any asset in India.
Prashant Bhushan responds:
The stated purpose of the sale purchase agreement between Hutch and Vodafone was to transfer the shares, assets and control of the Indian Telecom Company HEL, but they claim to have achieved this by transferring a single share of a Cayman Island-based holding company. This "device" of using the transfer of the Cayman Island company in the bid to avoid Capital Gains tax is clearly a tax avoidance device.
The Hindu : Opinion / Op-Ed : Prashant Bhushan responds: "Tax avoidance devices have been honed to a fine art by clever lawyers and consultants advising such corporations. Unfortunately, in the Vodafone and the Mauritius cases, the court has winked at them instead of frowning upon"
No comments:
Post a Comment
To check spam, comments on older posts are moderated, so expect some delay before your comments are published