Delhi High Court has directed the income tax department not to give effect to any fresh assessment order it passes against Vodafone for 2011-12 till February 18, when its plea against a dispute resolution panel’s decision to disallow exemptions amounting to over Rs 2800 crore is taken up.
The dispute resolution panel (DRP), set up under the income tax act as an alternative dispute resolution mechanism, had disallowed exemptions under various heads, including network site rentals, annual license fee, unaccounted income, depreciation on 3G spectrum and transfer pricing adjustments on advertisements and marketing expenses.
It had also referred the matter back to the assessing officer (AO).
A bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva last week allowed the AO to pass the assessment order but asked him not to give effect to it till the next date of hearing on February 18.
The court also issued notice to the Centre, DRP and the Income Tax (IT) department and sought their replies on Vodafone’s plea alleging that the panel’s November 16 order disallowing the exemptions was “illegal and arbitrary” and contrary to provisions of the IT Act.
The AO had in March 2015 passed a draft assesssment order, disallowing the exemptions sought by Vodafone.
The draft order was challenged by the company before the DRP which on November 16, had disallowed the objections raised by it and remanded back the matter back to the AO, the petition filed by Vodafone said.
The telecom major has contended that the panel, while disallowing the objections, had said that the proposed addition of over Rs 2800 crore has to be made to its taxable income for the AY 2011-12.
It also claimed that the panel gave no reasons for dismissing the objections.
“Huge additions have been proposed solely on a complete and prima facie non-application of mind..,” Vodafone has alleged in its plea against the DRP order.