Vodafone India Services Pvt Ltd (VISPL) has been granted a conditional stay by the Income Tax Appellate Tribunal (ITAT) in a transfer pricing case. The company has been directed to pay Rs 230 crores towards a disputed tax demand and give a corporate guarantee from an associate firm for nearly Rs 900 crore. As reported by ET Telecom, VISPL being unlisted and liable to pay the sum and provide a guarantee might challenge the tribunal ruling in the high court.
Tribunal Rejected VISPL’S Parent Firm Corporate Guarantee
The tribunal rejected the submission of the corporate guarantee provided by the ultimate parent of VISPL, which is Vodafone International Holdings BV. The tribunal stated that the corporate guarantee does not align with the present litigation. The corporate guarantee which Vodafone International Holding BV offers accounts for nearly Rs 3,538.48 crore. The tribunal also highlighted the reality of VISPL, stating that the assessee is an unlisted private company with an authorised capital of Rs 3 crore. The real importance of VISPL lies in the crucial role that it helped in pillaring the financial transactions for Vodafone Group.
Tribunal Asked VISPL To Fully Cooperate in the Matter
The tribunal revealed an international transaction of VISPL in which the Chairman of Max Group Analjit Singh and his wife Neelu Singh has written agreements which directs VISPL or any nominated person to purchase any or entire shares up to 51% held by Singhs in a company which is the Scorpio Beverages Pvt Ltd.
The transfer pricing offers noted that the VISPL nominated firm CGP India Investments is a Mauritius based company fully owned by CGP- the Cayman Islands through which Vodafone’s holding was routed towards Vodafone India. The tribunal also revealed that since CGP India Investments was nominated to buy 51% of Scorpio Beverages, it was enabled to purchase 4.53% equity in Vodafone India at Rs 1,241 crore, whereas the market price was nearly Rs 2,285 crores in excess.
The tribunal has asked VISPL to fully cooperate in expeditious disposal of the appeal in the question. Also, it warned that any lapse on its part would lead to the stay standing vacated forthwith.
