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Vodafone wins crucial Rs 8,500 cr transfer pricing case

Vodafone India has won its legal battle against the income-tax department in an Rs 8,500 crore transfer pricing case in the Bombay High court.

The dispute relates to the sale of the Ahmedabad-based call centre business (Vodafone India Services formerly known as 3 Global Services) for assessment year 2008-09. The income tax department dispensed a notice to the company seeking to add Rs 8,500 crore to the taxable income of 2007-08, saying it has avoided the transfer pricing rules.

In December 2013, the department demanded a tax of Rs 3,700 crore from the company in this case. The company approached the Income Tax Appellate Tribunal against the tax demand, but the tribunal ruled in favour of the department on December 10 last year.

It also referred the case back to the I-T department asking it to review the amount to be recovered from Vodafone.

Vodafone then appealed against the order of the tribunal in the Bombay High Court. The High Court has upheld the company's stand that the I-T department has no jurisdiction in the case.

The finance ministry has said it will examine the order and then take a decision. It has the facility to approach the Supreme Court. But finance minister Arun Jaitley had recently wished for a speedy resolution to tax issues.