The income tax department has opened yet another front in its epic battle with British telecom giant Vodafone by moving the Bombay High Court
in the Rs 3700 cr transfer pricing case, two government officials
familiar with the development told ET NOW. ET NOW was the first to
report the development.
" A plea has been filed challenging the recent order passed by the income tax appellate tribunal which stayed the tax demand with some riders. The revenue authorities are of the view that Vodafone India Services Private Limited should have been asked to pay a higher amount of around 25% of the demand as deposit with the department. They believe the precedent set by the Supreme Court in the main tax case regarding deposits by assessees should have been followed. The plea also raises concerns on enforceability of corporate guarantees ," said one of the two individuals mentioned above.When contacted, Pankaj Vasani, Head of Tax, ( India), VISPL declined to comment on the development. An ET NOW query to a Vodafone spokesperson was unanswered at the time of going to press.
On December 27th, 2013, the tribunal's stayed the IT tax demand 6 months or till the final disposal of the plea, whichever comes earlier. The bench directed Vodafone India Services Private Ltd to make an initial deposit of Rs 200 crores. The first installment of Rs 100 crores has to be paid by January 15th, 2014 and the second installment of Rs 100 crores is due by February 15th, 2014. Moreover, Vodafone was also directed by the tribunal to provide corporate guarantees for the balance tax amount of Rs 3500 crores by February 15th, 2014.
The tax demand was raised for FY 07-08 and is the fallout of an earlier transfer pricing order which sought to add Rs 8500 crores to the taxable income of VISPL. Earlier in September, the Bombay High Court while dismissing Vodafone India Services Private Ltd's writ petition had instructed the tax department not to serve the final assessment order till Dec 17th. The company had questioned the jurisdiction of the revenue authorities to add Rs 8,500 crore to its taxable income arm after scrutinizing an inter-group call center deal struck in 2007. The tax department claimed the deal was an " undisclosed, international transaction" while Vodafone maintained transfer pricing provisions did not apply and the deal was not taxable as it involved two domestic entities.
Transfer price refers to the actual price at which a transaction takes place between two related parties, usually belonging to the same group. Multinational and transnational firms use transfer pricing to
allocate revenue between different divisions.
In November 2010, the Supreme Court had directed Vodafone to deposit Rs 2500 crore within three weeks and a bank guarantee of Rs 8500 crore within 8 weeks. The company had challenged a capital gains tax demand of Rs 11,000 crore from its acquisition of Hutchison shares. in 2007.
SOURCE : ECONOMIC TIMES
" A plea has been filed challenging the recent order passed by the income tax appellate tribunal which stayed the tax demand with some riders. The revenue authorities are of the view that Vodafone India Services Private Limited should have been asked to pay a higher amount of around 25% of the demand as deposit with the department. They believe the precedent set by the Supreme Court in the main tax case regarding deposits by assessees should have been followed. The plea also raises concerns on enforceability of corporate guarantees ," said one of the two individuals mentioned above.When contacted, Pankaj Vasani, Head of Tax, ( India), VISPL declined to comment on the development. An ET NOW query to a Vodafone spokesperson was unanswered at the time of going to press.
On December 27th, 2013, the tribunal's stayed the IT tax demand 6 months or till the final disposal of the plea, whichever comes earlier. The bench directed Vodafone India Services Private Ltd to make an initial deposit of Rs 200 crores. The first installment of Rs 100 crores has to be paid by January 15th, 2014 and the second installment of Rs 100 crores is due by February 15th, 2014. Moreover, Vodafone was also directed by the tribunal to provide corporate guarantees for the balance tax amount of Rs 3500 crores by February 15th, 2014.
The tax demand was raised for FY 07-08 and is the fallout of an earlier transfer pricing order which sought to add Rs 8500 crores to the taxable income of VISPL. Earlier in September, the Bombay High Court while dismissing Vodafone India Services Private Ltd's writ petition had instructed the tax department not to serve the final assessment order till Dec 17th. The company had questioned the jurisdiction of the revenue authorities to add Rs 8,500 crore to its taxable income arm after scrutinizing an inter-group call center deal struck in 2007. The tax department claimed the deal was an " undisclosed, international transaction" while Vodafone maintained transfer pricing provisions did not apply and the deal was not taxable as it involved two domestic entities.
Transfer price refers to the actual price at which a transaction takes place between two related parties, usually belonging to the same group. Multinational and transnational firms use transfer pricing to
allocate revenue between different divisions.
In November 2010, the Supreme Court had directed Vodafone to deposit Rs 2500 crore within three weeks and a bank guarantee of Rs 8500 crore within 8 weeks. The company had challenged a capital gains tax demand of Rs 11,000 crore from its acquisition of Hutchison shares. in 2007.
SOURCE : ECONOMIC TIMES
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