ITAT Grants Conditional Stay to Voda India Services in Transfer Pricing Case

The Income Tax Appellate Tribunal (ITAT) on Monday granted a conditional stay to a Vodafone Group Plc entity Vodafone India Services Pvt Ltd (VISPL) in a transfer pricing case, directing the company to pay INR.230 crores towards a dispute tax demand and provide a corporate guarantee from an associate company worth INR.900 crores.

Unlisted VISPL, formerly ‘3Global Services Pvt Ltd’, which is liable to pay the sum and provide the guarantee, is likely to contest the tribunal ruling in a high court, a lawyer familiar with the matter, told ET.

The tax tribunal’s Mumbai bench, in its July 19 order deemed fit ‘”to grant a stay on collection of the impugned tax & interest demand (of INR.1, 128.46 crore) for assessment year 2014-15, on condition that the assessee company pays “INR.230 crores,” or roughly 20% of the disputed tax demand within 30 days. It also directed VISPL to “furnish a corporate guarantee from an associate company, which has unencumbered assets in India in excess of the balance disputed demands, i.e. INR.900 crores”.

The tribunal also rejected the VISPL counsel’s submission that a corporate guarantee of INR.3, 538.48 crore had been provided by its ultimate parent, Vodafone international Holdings BV, saying “it was not relevant to the present litigation” as it’s specific to assessment year 2008-09.

The tax tribunal, in its strongly worded order, said though the assessee is a small unlisted private company involved in the shared services business with an authorized capital of Rs 3 crore, its importance lies in the “strategic role it played in structuring financial transactions for Vodafone Group, a description typically answered by companies used as a conduit in the process of financial maneuverings”. S-ET

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