Vodafone Vs I-T dept: ITAT rules in favour of tax dept

This transfer pricing dispute arose from transactions involving Vodafone in 2007-08. The I-T department had red flagged the sale of call centre business to Hutchison Whampoa Properties India and the assignment of Call Options.

n the latest from Vodafone’s Rs 8,500 crore trasfer pricing case versus the Income Tax department, the Income Tax Appellate Tribunal or ITAT today ruled in favour of the tax department. The I-T tribunal said that assigning Call Options to Vodafone is an international transaction. It upheld the sale of Vodafone’s call centre business and added that income out of the sale of call centre business is taxable.    ITAT has partly allowed the telecom player’s appeal. It questioned the enhancement of tax demand by the I-T officer and said that some part of valuation on bothe the deals will be sent back to the I-T officer for reassessment. In December, the I-T department had slapped a demand of Rs 3700 crore on Vodafone. Consequently, Vodafone challenged the demand and moved the ITAT. The ITAT granted interim relief by allowing a stay of 6 months on the tax demand. The ITAT had also directed Vodafone to deposit Rs 200 crore with the department in two installments. However, the I-T department was unhappy with the stay as well as the initial deposit of merely Rs 200 crore. The I-T department had moved the Bombay High Court against the Income Tax Appellate Tribunal’s (ITAT) order granting temporary stay on the tax demand of Rs 3,700 crore. The Bombay High Court had in February directed the tribunal to hear both parties expeditiously and pass a ruling at the earliest. This transfer pricing dispute arose from transactions involving Vodafone in 2007-08. The I-T department had red flagged the sale of call centre business to Hutchison Whampoa Properties India and the assignment of Call Options, and had sought to add Rs 8500 crore to Vodafone’s taxable income.