Merger and Acquisition Synopsis

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Synopsis
Roll No. 09BAL102

CRITICAL ANALYSIS OF VODAFONE-HUTCH MERGER CASE
PROJECT FOR THE SUBJECT OF
Mergers and Acquisition
SUBMITTED BY
ALOK RATNOO
Semester – VII
B.A.LL.B. (Hons.)

UNDER THE GUIDANCE OF
Mr. Victor Nayak
Asst. Prof., ILNU

Submitted to
INSTITUTE OF LAW
NIRMA UNIVERSITY, AHMEDABAD

ACADEMIC YEAR (2012-13)

Title: CRITICAL ANALYSIS OF VODAFONE-HUTCH MERGER CASE
Introduction
Vodafone was embroiled in a $2.5 billion tax dispute with the Indian Income Tax Department over its purchase of Hutchison Essar Telecom services in April 2007. It was being alleged by the Indian Tax authorities that the transaction involved purchase of assets of an Indian Company, and therefore the transaction or part thereof was liable to be taxed in India. Vodafone Group Plc. entered India in 2007 through a subsidiary based in the Netherlands, which acquired Hutchison Telecommunications International Ltd’s (HTIL) stake in Hutchison Essar Ltd (HEL)—the joint venture that held and operated telecom licenses in India. This Cayman transaction, along with several related agreements, gave Vodafone control over 67% of HEL and extinguished Hong Kong-based Hutchison’s rights of control in India a deal that cost the world’s largest Telco $11.2 billion at the time. The crux of the dispute had been whether or not the Indian Income Tax Department has jurisdiction over the transaction. Vodafone had maintained from the outset that it is not liable to pay tax in India; and even if tax were somehow payable, then it should be Hutchison to bear the tax liability. In January 2012, the Indian Supreme Court passed the judgment in favor of Vodafone, saying that the Indian Income tax department had "no jurisdiction" to levy tax on overseas transaction between companies incorporated outside India. However, Indian government thinks otherwise. It believes that if an Indian company, Hutchison India Ltd., conducts a financial transaction, government should get its...
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