Transfer pricing case: Vodafone wins Rs 8,500 crore tax tussle

The Bombay High Court on Thursday ruled in favour of Vodafone Group Plc in the ongoing Rs 8,500 crore transfer pricing tax dispute case. The dispute involved the sale of its call centre business to Hutchinson and assignment of call options to Vodafone International earlier in 2008.

With this move, the court has overruled the order of the Income Tax Appellate Tribunal (ITAT) issued in 2014, which suggested that the income tax department had jurisdiction to handle this dispute.

Vodafone India had moved the high court in 2012 and challenged the jurisdiction of the tax department in issuing the transfer pricing order. Thursday's judgement is important as it marks progress in a case that was a pre-cursor for a series of other cases during the UPA-II tenure that ended in 2014.

The court has backed Vodafone's efforts to oppose a move by tax authorities to add Rs 8,500 crore to the taxable income unit. Vodafone had earlier received a tax claim of about Rs 3,900 crore.

How the case unfolded

-On December 10, 2014, the IT Appellate Tribunal held that Vodafone had structured the deal with India-based company Hutchison Whampoa Properties to circumvent the transfer pricing norms.

-Vodafone had appealed against the order of the Tribunal which was admitted by a high court division bench of Justices SC Dharmadhikari and Anil Menon.

-Vodafone pleaded in the high court that the IT department had no jurisdiction in the transfer pricing case because the said transaction was not international and did not attract tax.