Will study Bombay HC order in Vodafone case: Finance Ministry

The Bombay High Court order favoured Vodafone in the Rs 8,500-crore transfer pricing case

The Finance Ministry today said it will study the Bombay High Court order which favoured Vodafone in the Rs 8,500-crore transfer pricing case and then decide on its future course of action.

"We will study the order of Bombay High Court on Vodafone transfer pricing issue and then take a call accordingly," Revenue Secretary Hasmukh Adhia said here.

In a big relief for telecom major Vodafone India, the court today set aside an order of Income Tax Appellate Tribunal (ITAT) which had ruled that the I-T Department had powers to raise tax demand on the company in a Rs 8,500-crore transfer pricing case.

The company, in a statement, welcomed the court verdict.

The dispute dates back to 2008 and relates to the sale of the Ahmedabad-based call centre business (Vodafone India Services formerly known as 3 Global Services) for assessment year 2008-09. The Department slapped a tax demand on the company on October 31, 2012 under various sections of the I-T Act.

Transfer pricing involves related entities dealing at arm's length to ensure fair pricing of the asset that is transferred.

ITAT in December 2014 had held that the company had structured the deal with another India-based entity, Hutchison Whampoa Properties, with the intention to circumvent transfer pricing norms, even though it was an international transaction in which there was no arm's length dealing between the two related entities.

Vodafone pleaded in the high court that I-T Department had no jurisdiction in the transfer pricing case because the said transaction was not international and did not attract tax.