Vodafone Group has disagreed with the recent Rs. 3,700 crore tax demand notice served by India’s Income Tax Department in the appeal tribunal in a case relating to the sale of its call center business. The company maintains that there is no tax payable on this transaction, and that it will soon file an appeal before the tax appeal tribunal. Vodafone had received the latest tax demand on 18th December, 2013.
The UK-based company stated that, “the facts of this case, including the transaction structure, were examined in considerable detail by India’s Supreme Court, which delivered an unambiguous judgment affirming that there is indeed no tax due. Vodafone will continue to strongly defend its position against this Order.”
Last year, Vodafone had reportedly filed a petition in a local court in a transfer pricing dispute after authorities sought to add Rs. 8,500 crore to the taxable income of Vodafone India Services. This order pertains to a transfer pricing order in connection with sale of the call centre business to Hutchison Whampoa Properties India and “assignment of call options” to Vodafone International Holdings BV. Vodafone maintains there is no tax payable on grounds that the disputed transactions were reportedly domestic in nature and did not fall within the jurisdiction of ‘transfer pricing’ norms. Vodafone faces this tax liability ever since it acquired Hong Kong-based Hutchison Whampoa’s Indian cellular operation six years ago.
