Vodafone in India received a huge transfer pricing demand for undervaluation of shares under the Transfer Pricing provisions. They had filed a writ petition in Bombay High Court along with Shell who has faced a 3bn USD adjustment. Vodafone’s writ petition in Bombay High Court has been dismissed.
Background of the case: The assesse, Vodafone India Services Pvt Ltd (Vodafone India) had issued shares to its Group Company Vodafone TeleServices (India) Holdings Ltd during AY 2009-10. The shares were issued at premium of Rs 8,509 per share, aggregating to a total consideration of Rs 246.39 Cr. The valuation of shares was determined by the assesse as per CCI valuation guidelines. Vodafone India stated that out of abundant precaution, it also reported the transaction of issue of shares in its Form no 3CEB for AY 2009-10. The TPO vide order passed on January 28th, 2013, made Transfer pricing adjustment of Rs 1308.9 crores on transaction of issue of equity shares. Vodafone India has filed objections against the draft assessment order before the Disputes Resolution Panel (DRP) in April 2013. Vodafone India also filed a writ petition before Bombay High Court, challenging the jurisdiction to make transfer pricing adjustment on issue of shares.
The following articles discuss the decision of The Bombay High Court that the tax department’s dispute resolution panel (DRP) should decide on the transfer pricing case involving the Indian unit of Vodafone Group Plc. to resolve the tax disputes, with a quote by Mr. Amit Maheshwari, a Partner with LEA member firm Ashok Maheshwary & Associates:
¾ Live mint and the Wall Street Journal: http://www.akmglobal.com/dispute-resolution.pdf
¾ The Hindu Business Line: http://www.akmglobal.com/High-Court-verdict-a-mixed-bag.pdf
¾ The Financial Express: http://www.akmglobal.com/hc-sends-vodafone-to-i-t-panel.pdf