By Prasanta Sahu
NEW DELHI--An income tax tribunal in India Wednesday backed the
claim of local authorities that Vodafone was liable to pay tax in a
transfer pricing case, potentially dealing a fresh blow to the
British telecommunication giant that has been embroiled in several
disputes in the country.
The case relates to the sale of Vodafone's call centre business
in India to Hutchison Whampoa Properties India and the transfer of
call options to Vodafone International BV in 2007.
Indian authorities had demanded 37 billion rupees ($597 million)
as tax from Vodafone, saying that the company had made an income of
85 billion rupees ($1.4 billion) on the deal that it classified as
an "international transaction."
Vodafone, however, argued that the transaction wasn't an
international transaction, hence it wasn't liable to pay tax on
it.
The Income Tax Appellate Tribunal in Mumbai, which is a judicial
authority, upheld the authorities stand that it was in fact an
international transaction. However, it rejected the income
determined by authorities and ordered them to revise the
amount.
Vodafone has been stuck in several tax disputes in India. In
another case relating to a deal with Hutchison Whampoa, India's
Supreme Court had ruled in favor of the company, dismissing a
nearly $2 billion demand by tax authorities. The Bombay High Court
had also ruled in favor of the company in a separate transfer
pricing case in October.
In the latest case, the company has the option to appeal to
higher courts to overturn the order of the tribunal.
Write to Prasanta Sahu at prasanta.sahu@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires