The Bombay High Court is expected to issue directions on Monday in the Rs 8,500-crore Vodafone transfer pricing case.
Vodafone had through a writ petition in February challenged the jurisdiction of the Tax Department in issuing a draft transfer pricing order that sought to add Rs 8,500 crore to the taxable income of Vodafone.
The Income Tax Department’s draft transfer pricing order, issued in December 2011, related to transaction on Vodafone’s call centre business.
Separately, Vodafone had also in end January filed objections to the draft transfer pricing order before the dispute resolution panel (DRP).
If the transfer pricing adjustment of Rs 8,500 crore were to be confirmed, then Vodafone may face tax bill of Rs 2,805 crore on this account, say tax experts.
“All the pleadings (in Vodafone Transfer pricing case) have been made. The matter is listed for directions on Monday,” sources close to the development said. When the writ petition was filed in February, Vodafone had said that Supreme Court’s judgment in the $11.2-billion Vodafone-Hutch deal had several observations which appeared to favour the company’s position in the transfer pricing matter.
On January 20, the Supreme Court had ruled that Income Tax Department had no jurisdiction to tax the $11.2-billion Hutch-Vodafone deal struck in 2007.
But in March, the Government had come up with retrospective amendments to the income tax law to bring to tax all offshore indirect transfer of shares with underlying Indian assets.
Vodafone had few days ago offered to pay Rs 8,000 crore to settle the tax dispute with the Indian Government (on the $11.2-billion Vodafone-Hutchison deal).
This option is there if the Government were to consider waiving penalty and interest amount, Analjit Singh, Vodafone’s non-Executive Chairman in India, said after a meeting with the Revenue Department officials here.
The Income Tax Department had raised tax demand of Rs 11,218-crore (including Rs 7,900 crore of tax and the remaining interest) on Vodafone for the $11.2-billion Vodafone-Hutchison deal in 2007.