sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« Transfer Pricing »
 Transfer pricing review and adjustments in Germany
 Indian advance pricing agreement uses customs value as arm’s length price
 Indian advance pricing agreement uses customs value as arm’s length price
  How advance pricing agreement helps India-Singapore business ties
 Doing business in India: ‘Substance’ over ‘form’ in transfer pricing regime
 How advance pricing agreement helps India-Singapore business ties
  CBDT to accept transfer pricing MAP sans riders
 How transfer pricing documentation can make you a happier person
 Transfer pricing review and adjustments in Luxembourg
 Here is what Modi government can do for transfer pricing
 Transfer Pricing In International Transactions – An Overview

Vodafone wins transfer pricing battle against I-T department
October, 13th 2015

Vodafone India won its battle against the income-tax department over transfer pricing in the Bombay High Court, which set aside the appellate tribunal's ruling that had gone against the telecom company. Thursday's verdict was cause for optimism among multinationals mired in similar, long-running disputes that India will come good on its pledge to improve the investment climate by moving away from an adversarial tax regime.

The company's lawyer was emphatic about the wider implications of the decision in the Rs 8,500-crore transfer pricing case.

"Verdict of the Bombay High Court reaffirms justice for Vodafone and an excellent signal for foreign investors into India," said Fereshte Sethna, senior partner at law firm DMD Advocates. The division bench of SC Dharmadhikari and AK Menon decided against the Income-Tax Appellate Tribunal (ITAT) order.

Vodafone wins transfer pricing battle against I-T department The ITAT order had said local authorities had the power to raise the tax demand related to the sale of a call centre in Ahmedabad in 2007.

In an oral order, the bench relied on an earlier Supreme Court judgment and ruled that there had been no transfer of "call options" and hence the transaction didn't fall within the purview of transfer pricing. The detailed order had not been uploaded on the court website at press time.

Overseas investors such as Vodafone, IBM and Nokia Oyj hope the Narendra Modi government won't appeal against the ruling in the Supreme Court in line with its campaign to improve the ease of doing business and create a more welcoming environment as part of its Make in India initiative.

In line with this, the government decided in January not to challenge a Bombay High Court decision that favoured Vodafone in another transfer pricing case. Vodafone's Rs 20,000-crore withholding tax dispute is currently in arbitration.

Revenue secretary Hasmukh Adhia's response was carefully worded. "We will study the order of Bombay HC on Vodafone transfer pricing issue and then take a call on it accordingly," he told reporters.

Vodafone welcomed the decision. Thursday's decision is expected to offer relief to companies such as IBM and Leighton India that face similar cases, as the government has decided to accept the decisions of courts, tribunals and dispute resolution panels in favour of taxpayers.

The government adopted an investor-friendly position on minimum alternate tax as well recently.

Vodafone counsel Anuradha Dutt said the order will bring "quietus to litigation that struck (Vodafone) in 2007-2008. Hopefully, this is the last of the legacy litigation leaving us with just the arbitration, unless this is challenged."

The dispute stems from the sale of the Ahmedabad-based call centre business - Vodafone India Services, formerly known as 3 Global Services. The I-T department had slapped a transfer pricing order against Vodafone's India arm, seeking to add Rs 8,500 crore to its taxable income for FY08. The revenue authorities said the deal was an "undisclosed, international transaction" and therefore transfer pricing norms applied.
Transfer price refers to the actual price at which a transaction takes place between two related parties, usually belonging to the same group. According to law, all cross-border deals between group companies need to be at arm's length, that is, as if it was with an unrelated company.

The demand was challenged by the telecom company in the ITAT. In December 2014, the tribunal ruled that the sale of the call centre business was an international transaction and assignment of call options had taken place. Therefore, the revenue department had jurisdiction to proceed against the company. Vodafone challenged the order in the Bombay High Court, which ruled in its favour on Thursday.

"The judgment adds to the relief rally seen by Vodafone in its tax disputes and reinforces the trust of the taxpayer in the Indian judiciary, which has not been shying away in giving favourable orders, even in high-stake cases," said Rakesh Nangia, managing partner of tax advisory Nangia & Co. "The question relating to options was already considered by the Supreme Court and this decision is line with the said decision," said Tehmina Sharma, director, tax, transfer pricing, at Deloitte Haskins & Sells LLP. "However, one has to wait and watch whether revenue will appeal against the order in the Supreme Court or accept the position as in the matter of issue of shares.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Organic SEO Outsourcing Organic Search Engine Optimization Outsourcing Organic Website SEO Organic SEO India Website SEO India Organic Search Engine Optimization India Organic Internet SEO India Organic Web

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions