Vodafone Wins India Tax Case

India's Supreme Court ruled that Vodafone Group isn't liable to pay taxes on the deal it struck to enter India in 2007, delivering a major victory to the British telecommunications giant and providing some encouragement to foreign companies that are concerned about the country's investment climate.

The court's decision means that Vodafone won't have to pay more than $2 billion in taxes on its $11.2 billion acquisition of a controlling stake in an Indian cellphone company from Hong Kong's Hutchison Whampoa Ltd. Indian authorities don't have jurisdiction to tax the deal, because it was structured as a transaction between two foreign entities, a three-judge panel of the court said. The highly anticipated verdict, which overturns a ruling by a lower court in Mumbai, is a huge win for Vodafone, vindicating the company's four-year legal fight in India. The tax case was closely watched and became a symbol for many foreign investors of the uncertainty of doing business in India, the unpredictability of regulators and the risks foreign firms face if they decide to make big bets on Indian growth.