The company, in a statement, welcomed the court verdict
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Mumbai: Vodafone India on Thursday had a major relief after the Bombay High Court set aside an order of the Income-Tax Appellate Tribunal (ITAT) which had ruled that the I-T department had powers to raise tax demands on the company in a Rs 8,500-crore transfer pricing case. The company, in a statement, welcomed the court verdict. However, it made no further comment.
The transfer pricing dispute arose after the I-T department issued a draft transfer pricing order in December 2011 and added Rs 8,500 crore to Vodafone’s taxable income from the sale of an Ahmedabad-based call centre business (Vodafone India Services, formerly known as 3 Global Services) in 2007. Transfer pricing involves related entities dealing at arm’s length to ensure fair pricing of the asset transferred.
In February 2012, Vodafone challenged the jurisdiction of the I-T department before the ITAT and also approached the Bombay High Court. In 2013, the I-T department had issued a tax demand of Rs 3,700 crore to Vodafone India. However, the tribunal had stayed the demand during the pendency of the plea and directed Vodafone to deposit '200 crore by February 15, 2014, which it had done.
The tribunal had on December 10 last year held that the company had structured the deal with another India-based entity, Hutchison Whampoa Properties, with the intention of circumventing transfer pricing norms, even though it was an international transaction wherein there was no arm’s-length dealing between the two related entities. However, the tribunal had referred the case back to the I-T department asking it to revise the amount to be recovered from Vodafone.
Vodafone had appealed against the order of the tribunal and pleaded in the High Court that the I-T department had no jurisdiction in the transfer pricing case because the said transaction was not international and hence it did not attract tax.
( Source : deccan chronicle )
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