Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
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
 
 
 
 
Popular Search: TDS :: VAT Audit :: VAT RATES :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: empanelment :: form 3cd :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS
 
 
« Transfer Pricing »
 India Finalizes Pricing Reporting Rules Under OECD Plan
 Final Transfer Pricing Rules For Multi-Nationals Notified
 Govt eases transfer pricing norms for offshore funds
 India’s final transfer pricing master file rules retain unique flavor
 Transfer pricing: tighter reporting norms for multinationals notified
 Transfer pricing once again comes to the fore for MNCs
 Valuation rules under GST could lead to transfer pricing disputes
 A web of requirements in transfer pricing regime
 RBI panel reveals ad hoc, arbitrary practices by banks to inflate interest rates
 Taxman tightens reporting norms for MNCs
 Sabh Infrastructure Ltd Vs. Asstt. Commissioner Of Income Tax

ITAT rules against Vodafone in Rs 8,500 cr transfer pricing case
December, 12th 2014

In a fresh blow to Vodafone India, the Income Tax Appellate Tribunal has ruled that the tax authorities have the powers to raise a demand on the telecom major in the Rs 8,500 crore transfer-pricing dispute.

The case relates to the sale of one of its call centres in Ahmedabad in 2007.

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

However, the tribunal has sent the case back to the Income Tax department, asking them to revise the amount to be recovered from the company.

The Mumbai bench of ITAT, in a 189-page order yesterday, ruled that the deal relating to sale of the call centre business was structured with the motive to "circumvent the transfer pricing provisions of the Income Tax Act" and was in essence an "international transaction between two related parties and thus would be subject to the transfer pricing provisions".

Presiding officers Vijay Pal Rao and RC Sharma said: "According to us, this is an international transaction since the assignment of the call option took place."

In a partial reprieve for the company, the tribunal however sent the case back to the I-T dept for determining the revised taxable amount as it did not accept the valuation arrived at by the tax authority.

"Vodafone India's appeal is partly allowed," the presiding officers said.

A Vodafone India spokesman refused to comment on the development, saying that only its London headquarters could offer a reaction. A mail sent to the company's spokesman in London did not elicit any response.

The dispute 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 sections 143(3) and 144C(13) of the Income Tax Act.

Vodafone India Services was originally incorporated in March 1999 in the name of 3 Global Services as a wholly-owned arm of Hutchison Teleservices India Holdings, a company incorporated in Mauritius.
Hutchison Teleservices, in turn, was a wholly-owned subsidiary of CGP Investments Holdings,
incorporated in the Cayman Islands.

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

The dispute had arisen after the tax authority issued draft transfer pricing order in December 2011 and added Rs 8,500 crore to Vodafone's taxable income for sale of its call centre business in 2007.

In February 2012, Vodafone challenged the jurisdiction of the Income Tax department before the ITAT and also approached the Bombay High Court.

In 2013, the Income Tax department had issued a tax demand of Rs 3,700 crore to Vodafone India. However, the tribunal had stayed the demand during the pendency of the plea and directed Vodafone to deposit Rs 200 crore by February 15, 2014 which it had done.

Vodafone's counsel Abhishek Manu Singhvi argued that the Supreme Court order of February 2011 had upheld the company's position that there being no assignment of call options there was no question of taxable income.

He also argued that the sale of the call centre business was between two domestic companies and that the transfer pricing officer had no jurisdiction over the deal. Vodafone counsel added that they had established a conclusive case at the prima facie stage.

This is not the only tax dispute the British telecom giant is facing in the country. In another dispute, the Bombay High Court ruled in favour of Vodafone in October, saying it need not pay an additional tax of Rs 3,200 crore as demanded by the tax authority.

The company is also about to begin an international arbitration against the government claim of Rs 21,000 crore in taxes as capital gains levy for its purchase of Hutchison assets in February 2007.

The government claims that Vodafone should have deducted capital gains tax when it made the USD 11 billion payment to Hutchison while purchasing its India assets. This argument was quashed by the Supreme Court in February 2011 but the then government introduced retro tax in that year's budget,
prompting Vodafone to challenge the validity of the claim at an international court of arbitration.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
System Testing Solution Manual Software Testing Solutions Automation Software Testing Solutions System Workflow Testing System Manual Testing

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