Boston, MA 10/10/2014 (wallstreetpr) – Vodafone Group Plc (ADR) (NASDAQ:VOD) has secured a court ruling in its favor today in a case pertaining to transfer pricing. It is to be noted that the Indian Tax department had slapped Rs. 3,200 crore more to the taxable income of the company’s India based subsidiary for the year 2009-10.
No Tax Obligation
The Bombay High court division bench ruled that there is no tax obligation with respect to share premium received by Vodafone Group Plc (ADR) (NASDAQ:VOD), issued by its Indian arm. The Indian tax laws off late have become a point of concern for foreign investors as Leighton India Contractors Pvt Ltd and Shell India Markets Pvt Ltd are among those facing similar tax cases.
The case of transfer pricing emerged in January after Vodafone India issued shares at lower rate to its parent company, Vodafone Group Plc (ADR) (NASDAQ:VOD). The company received show cause notice from the Tax department then. The company had responded with more clarification on the subject matter and extension of deadline for filing a reply to the notice. On January 27, 2014, the company had moved the Bombay High Court seeking decision to rule out a tax demand order, which was later issued on January 29, 2014. The company’s Senior Counsel, Harish Salve, presented the argument that the share premium could in no way be brought under the tax umbrella by the authorities.
Other Tax Cases
Other than this, Vodafone Group Plc (ADR) (NASDAQ:VOD)’s Indian subsidiary is also entangled in two more tax cases related to transfer pricing. Both of the cases carry a tax demand of Rs. 3,700 crore and Rs. 400 crore and is pending before the Bombay high court. The major tax case revolves around the company’s purchase of Hutchison Telecommunications International Ltd back in 2007. Despite of Supreme Court’s favored decision, the case was opened on account of retrospective amendments in the Union Budget of 2012.
