Vodafone to pay Rs 200 crore; final ruling in March

Dec 28 2013, 05:01 IST
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SummaryThe Income Tax Appellate Tribunal on Friday asked Vodafone Group Plc to pay R200 crore in two tranches by February 15

The Income Tax Appellate Tribunal on Friday asked Vodafone Group Plc to pay R200 crore in two tranches by February 15, apart from furnishing a corporate guarantee undertaking to pay up the entire taxable amount of R3,700 crore in case it loses a transfer pricing case relating to “assignment of call options” relating to 2007.

The tax tribunal has fixed the final date of hearing on the matter on March 19.

According to the tribunal’s interim order, Vodafone Group needs to pay R100 crore by January 15 followed by another R100 crore by February 15 along with the bank guarantee.

The notice to pay R3,700 crore in a transfer pricing case was served on Vodafone around a week ago once the dispute resolution panel (DRP), a collegium of three income tax commissioners that decides on disputes relating to tax matters, ruled in favour of the revenue department. The tax notice was for assessment year 2008-09.

The company had filed its appeal against the DRP’s order in the tribunal on December 23.

The case relates to its Indian unit Vodafone India Services (VISPL), which had written agreements (call options) with Max Group chairman Analjit Singh and Vodafone's former CEO Asim Ghosh to buy their shares in the company. Prior to Vodafone, Hutchison, which held the majority stake in the then Hutch-Essar entity, had this agreement, which was transferred to Vodafone when in February 2007 it acquired Hutchison's 67% stake in the joint venture.

The income tax department raised the tax demand stating that the share transfer by Singh and Ghosh had taken place in 2007 to VISPL. However, the company disputes this, stating that it simply had an agreement but no transaction was done so there's no tax payable in the matter. Company sources said that the matter was part of the overall Rs 11,000-crore tax case that the company fought against the revenue department in the Supreme Court and won.

“Vodafone can confirm that the Income Tax Appellate Tribunal (ITAT) has granted a stay of execution of the Transfer Pricing Order which Vodafone received in December 2011,” a Vodafone spokesperson said. “Vodafone maintains that there is no tax payable on this transaction and will continue to strongly defend its position against this Order.”

Earlier in the month it had stated: “Vodafone maintains that there is no tax payable on this transaction and the company will file an appeal before the tax appeal tribunal as soon as possible.”

“The facts of

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