Vodafone Group will challenge the Indian Income-Tax Department’s notice, alleging the U.K.-based telecom major had under priced its shares issued to a Mauritius—based group company by about Rs 1,300 crore.
“As this latest order relates to a share subscription and share subscriptions are not covered by transfer pricing rules, either in India or internationally, we will be challenging the order as it has no basis in law,” a Vodafone spokesperson said.
“Vodafone has received a transfer pricing order in relation to the issue of shares by VISPL (Vodafone India Services Pvt Ltd). This new order is linked to the 2007/8 transfer pricing dispute, which Vodafone is already challenging before the dispute resolution panel. Vodafone has also filed a writ petition challenging the jurisdictional issues on the basis of precedent established in the recent Vodafone International Holdings BV-Hutchison Supreme Court judgment,” he added.
The I-T department has challenged the valuation method adopted by VISPL, which had issued shares to Vodafone Teleservices Mauritius in 2007—08.
Indian tax authorities had slapped a Rs 11,200-crore demand notice to the British telecom major on the capital gains arising from its $11.2-billion offshore deal with Hutchison Whampoa in 2007.
In January, the department had sent a reminder letter seeking Rs 14,000 crore in dues, including interest on delayed payment.