A judge hearing Vodafone India’s Rs 8,500-crore transfer pricing case has recused himself on Monday, stating his son-in-law had worked with KPMG.
KPMG – a financial services, business advisory and internal audit firm – had represented Vodafone before the Income-Tax department’s Dispute Resolution Panel (DRP).
The judge, Justice J.P. Devadhar of the Bombay High Court, recused from the hearing stating his son-in-law had worked with KPMG as its Human Resources manager. A two-member Bench, with Justice M.S. Sanklecha being the other judge on the panel, had started hearing the case on September 24.
After the recusement, the High Court accordingly directed that the order of DRP would not be served on Vodafone and no assessment order would be passed for eight weeks. A new Bench would be constituted for the hearing, the Court said.
Transfer pricing, or what is referred to as ‘arm’s length principle’, is to establish analysis of pricing in comparable transactions between two or more unrelated parties.
Senior advocate and Supreme Court lawyer Harish Salve is representing Vodafone.
Vodafone, through a writ petition in February, had challenged the I-T Department’s jurisdiction in issuing a draft transfer pricing order that sought to add Rs 8,500 crore to the company’s taxable income.
The draft transfer pricing order, issued in December 2011, related to the transaction on Vodafone’s call centre business.
A dispute resolution panel is also simultaneously hearing Vodafone’s appeal against tax liability. In January, the company had also filed its objections to the draft transfer pricing order before the panel.
The I-T Department had raised a tax demand of Rs 11,218 crore (including Rs 7,900 crore of tax and remaining interest) on Vodafone for the $11.2-billion deal with Hutchison.