Govt defers decision on Vodafone stake sale by Singh, Ghosh
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Last Updated: Tuesday, November 17, 2009, 21:06
New Delhi: Based on the recommendation of the Foreign Investment Promotion Board (FIPB), the government has deferred a decision the proposals of Analjit Singh and Asim Ghosh to part-sell their minority stakes in Vodafone Essar.

On October 30 this year, the FIPB had recommended that a decision their move be deferred as, among other things, the Department of Revenue had objected to the proposals on the ground of "treaty shopping", or tax avoidance, highly-placed sources told agency.

In the domestic context, treaty shopping refers to cases where investors use the Mauritius route to bring in investments, taking advantage of the double-tax avoidance treaty between the two countries.

Sources also said the Department of Industrial Policy and Promotion (DIPP) has sought more time in taking a decision saying that they are in the process of examining the same.

Meanwhile, the FIPB has directed the DIPP to examine the comments of the Department of Economic Affairs (DEA), which had held that the proposals 'technically conform' to FDI guidelines on the issue of "Indian control" of the companies involved.

The DEA, however, is believed to have opined that the numerous holding companies through which Singh and Ghosh hold stake in Vodafone Essar, are all shell companies.

Singh and Ghosh want to sell 49 per cent each of their holdings in these two investment companies that indirectly own stakes in Vodafone Essar.

Bureau Report

First Published: Tuesday, November 17, 2009, 21:06

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