IT Department Withdraws Rs 8,500-Crore Transfer Pricing Case Against Vodafone India: Report

IT Department Withdraws Rs 8,500-Crore Transfer Pricing Case Against Vodafone India
In a surprise development, the Income Tax Department has withdrawn its long-pending Rs 8,500-crore transfer pricing case against Vodafone India Services Pvt. Ltd. The Commissioner of Income Tax filed a plea to drop the case before a bench led by Chief Justice B R Gavai, which permitted the department to do so, according to multiple reports, including The Economic Times (November 4) and Live Mint (November 3, 2025).

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Also Read: Supreme Court Allows Centre to Reconsider Vodafone Idea’s Entire AGR Dues

Dispute Originated From Vodafone’s 2008 Call Centre Sale

According to the Supreme Court’s website, the matter had been pending since 2016 and was last listed for hearing in April 2017, with no progress since then. The case withdrawal comes shortly after the apex court extended relief to Vodafone Idea Ltd. in relation to its adjusted gross revenue (AGR) dues, allowing the government to reassess the total dues as of FY17, including interest and penalties.

The transfer pricing dispute dates back to FY08 and arose from the sale of Vodafone India’s Ahmedabad-based call centre business, formerly known as 3 Global Services Pvt. Ltd., to Hutchison Whampoa Properties (India) Ltd. as part of an internal restructuring exercise.

Following the transaction, the Income Tax Department issued an order under Sections 143(3) and 144C(13) of the Income Tax Act, 1961, in October 2012, alleging that Vodafone had engaged in an undisclosed international transaction.

The tax department claimed that the transaction involved the transfer of intangible assets and call options to a related party, qualifying it as an international transaction under Indian transfer pricing rules.

ITAT and High Court Delivered Contrasting Rulings

Based on this assessment, the department sought to add Rs 8,500 crore to Vodafone’s taxable income, claiming the transaction was not conducted at arm’s length. The Income Tax Appellate Tribunal (ITAT) upheld the department’s view in 2014, ruling that the transfer pricing provisions applied and that Vodafone had not substantiated the valuation.