Vodafone to challenge tax dept in transfer pricing case
British telecom major Vodafone on Thursday said that it will challenge the income tax department’s order on the transfer pricing case pertaining to 2007-08 on sale of shares of its Indian unit to a Mauritius-based group company.
“As this latest order relates to a share subscription, and share subscriptions are not covered by transfer pricing rules either in India or internationally, we will be challenging the order as it has no basis in law,” a Vodafone spokesperson said.
Last week, the income tax authorities had issued an order to Vodafone alleging that Vodafone India under-priced its shares issued to Vodafone Teleservices Mauritius in 2007-08, by around Rs 1,300 crore. The department also challenged the valuation method adopted by Vodafone India Services Pvt Ltd (VISPL) while issuing shares to the Mauritius-based company.
“Vodafone has received a transfer pricing order in relation to the issue of shares by VISPL. This new order is linked to the 2007-08 transfer pricing dispute, which Vodafone is already challenging before the Dispute Resolution Panel,” the spokesperson added.
The company is already tangled in an another tax dispute with the income tax department regarding its 2007 acquisition of Hong Kong-based Hutchison Whampoa’s stake in its Indian telecom business.
The department has raised a tax liability of Rs 11,200 crore regarding the acquisition, a move which was challenged by the company on the grounds of jurisdiction.
“Vodafone has also filed a writ petition challenging the jurisdictional issues on the basis of precedent established in the recent Vodafone International Holdings BV- Hutchison Supreme Court judgement,”
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