A month after the Bombay High Court dismissed Vodafone Plc’s writ petition on the Rs 8,500-crore transfer pricing adjustment case, the telecom major is fighting yet another case against Income Tax Department.
Vodafone has questioned the I-T Department’s order which alleged that Vodafone India under-priced its shares issued to a Mauritius-based group company by about Rs 1,300 crore.
This case relates to the tax assessment done by the I-T Department for the financial year 2009-10, said Senior Counsel Harish Salve, who is arguing on behalf of Vodafone India.
Salve argued that the tax department had issued the notice as they believed that Vodafone had suppressed the valuation of the shares issued that amounted to Rs 1,300 crore.
He said while the parent company invested Rs 246 crore and bought 2.89 lakh shares, the I-T Department values each of these shares at Rs 8,509, while the transfer pricing officer valued it around Rs 80,000.
The department claims that the difference in valuation is to be treated as loan given to the company, and tax could be claimed on that.
He further said the I-T Department cannot impose tax on a premium which has not been received by the company.
Vodafone had received a transfer pricing order from the tax department in relation to the issue of shares by VISPL (Vodafone India Services Pvt Ltd) and the order was linked to the 2007-08 transfer pricing dispute of Rs 8,500 crore.
The tax authorities have challenged the valuation method adopted by VISPL, which had issued shares to Vodafone Teleservices Mauritius in 2007-08. The I-T Department had slapped a Rs 11,200-crore demand notice to the British telecom major on the capital gains arising from its $11.2-billion offshore deal with Hutchison Whampoa in 2007.
Through this deal, Vodafone International had acquired a controlling interest in the Indian telecom unit of the Hong Kong-based Hutchison Whampoa, then Hutchison Essar.
In January, the Department had sent a reminder letter seeking Rs 14,000 crore in dues, including interest on delayed payment. The case will be heard by the Chief Justice tomorrow.