Taxman to Challenge Court Verdict in Vodafone Transfer Pricing Case


New Delhi: The Income Tax Department on Wednesday said it will move the Supreme Court challenging the Bombay High Court’s order in the Rs 8,500-crore Vodafone transfer pricing case.

“In the case of Vodafone, it has been decided to file SLP before the Supreme Court against the order of the Mumbai High Court,” the Income Tax Department said.

In October 2015, the Bombay High Court had set aside an order of the Income Tax Appellate Tribunal (ITAT), which had ruled that the I-T department had powers to raise tax demand on the company in the transfer pricing (TP) case.

The case dates back to 2008 relating to sale of one of its call centres in Ahmedabad in 2007.

“A substantial question of law has arisen on the issue of taxability of capital gains arising on the surrender of call option rights,” the Income Tax Department said in a series of tweets.

In its ruling, the high court had held that surrender of option rights is not a transfer under the provisions of the I-T Act.

“This ruling will have adverse effect in many other domestic cases also. As such, it has been decided to challenge the said ruling,” the department added.

Transfer pricing involves related entities dealing at arm’s length to ensure fair pricing of the asset that is transferred.