Industry Body Welcomes Attorney General’s Stand on Vodafone Transfer Pricing Case

New Delhi: Industry body Ficci has welcomed Attorney General Mukul Rohatgi asking the Income Tax Department to not file an appeal against the Bombay High Court judgment in the transfer pricing case of Vodafone.

“FICCI welcomes the decision of the government not to appeal against the judgment relating to the transfer pricing tax issue involving Vodafone,” Ficci president Sidharth Birla said in a statement on Wednesday.

Attorney General Mukul Rohatgi said that he has asked the Income Tax Department to desist from filing appeal against the Bombay High Court ruling that Vodafone is not liable to pay an income tax demand of Rs 3,200 crore in a case relating to transfer pricing.

“FICCI had earlier suggested that the detailed judgment of the Bombay High Court must be allowed to remain conclusive. The exhaustive interpretations and conclusions therein set the ground for avoiding needless disputes in respect of such capital raising, and can help resolve multiple litigations,” Mr Birla said.

The Attorney General said he was in agreement with the view taken by the CBDT Chairman in the matter.

“I have concurred with the view of the CBDT chairman,” Mr Rohatgi said.

His opinion comes in the backdrop of reports that the Income Tax Department was keen on challenging the October 10 judgment of the High Court verdict.

The I-T department had asked the company to pay additional income tax alleging that it had undervalued its shares in the subsidiary Vodafone India Services while transferring them to the parent company in Britain.

Transfer pricing is the practice of arm’s length pricing for transactions between group companies based in different countries to ensure a fair price – one that would have been charged to an unrelated party – is levied.