The Mumbai High Court ruled yesterday in favor of Vodafone in the $530 million tax case. The court said that telecom service provider Vodafone need not pay the tax claim of $530 million slapped on it for buying shares in its Indian arm.
The case pertains to Vodafone’s outsourcing arm in Pune issuing shares to its parent firm. The IT (Income Tax) Department had demanded the amount from Vodafone’s outsourcing unit, with taxes plus interest, which the company had challenged. The authorities said the funds were infused by the parent company into its Indian arm at a discounted share premium.
The authorities said this transaction had resulted in Vodafone paying a much lesser amount to get more shares in its Indian arm, which they said was subject to taxes under what is called transfer pricing, IANS reported.
“We feel that there is no taxable income on the share premium received on the issue of the shares,” a division bench of Chief Justice Mohit Shah and Justice MS Sanklecha ruled.
“Vodafone has maintained consistently throughout the legal proceedings that this transaction was not taxable. We welcome the decision yesterday in the Mumbai High Court,” the company said in a statement.
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