Vodafone, on Thursday, said it would challenge the tax authorities’ order in the transfer pricing case pertaining to sale of shares of its Indian unit to a Mauritius-based group company.
“As this latest order relates to a share subscription, and since share subscriptions are not covered by transfer pricing rules either in India or internationally, we will be challenging the order as it has no basis in law,” a Vodafone Group spokesperson said.
Last week, the tax authorities have issued an order to Vodafone, alleging that Vodafone India under-priced its shares issued to a Mauritius-based group company reportedly by around Rs.1,300 crore.
The tax authorities have challenged the valuation method adopted by Vodafone India Services Pvt. Ltd. (VISPL) while issuing shares to Vodafone Teleservices Mauritius in 2007-08.
“Vodafone has received a transfer pricing order in relation to the issue of shares by VISPL. This new order is linked to the 2007-08 transfer pricing dispute, which Vodafone is already challenging before the Dispute Resolution Panel,” the spokesperson said.
The spokesperson added Vodafone had also filed a writ petition challenging the jurisdictional issues on the basis of precedent established in the recent Vodafone International Holdings BV-Hutchison Supreme Court judgment.
Vodafone is also engaged with the Central Government regarding the Rs.11,200 crore tax liability issue related to the British firm’s acquisition of Indian telecom assets of Hutchison Whampoa.
Last week, Vodafone India non-Executive Chairman Analjit Singh met Revenue Secretary Sumit Bose in an attempt to resolve the matter.