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Bombay High Court refers Vodafone share sale dispute to tax panel - The Economic Times

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Bombay High Court refers Vodafone share sale dispute to tax panel
By Maulik Vyas, ET Bureau | 29 Nov, 2013, 07.10PM IST
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READ MORE ON Vodafone Group Plc | Tax | Hutchison Whampoa | Dispute Resolution Panel | Bombay high court

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MUMBAI: The Bombay High Court has directed British telecom giant Vodafone Realty Trends: Buzz in the sector Personal Finance: Things to know! Plc's Indian subsidiary to approach the Dispute Resolution Panel (DRP) with its petition against the Income Tax department's demand of Rs 1,300 crore. The court has given Vodafone two weeks to file its petition before the panel.

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Bombay HC asked I-T dept to relook at Vodafone tax case

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"The petitioner (Vodafone India) feels harassed because no opportunity was given to the company by revenue authorities," observed the division bench and said that the DRP will consider preliminary applicability of Chapter X (relating to the Transfer Pricing provisions) within 2 months. "The petitioner can approach court back if they have still any reservations." Income Tax department raised a red flag when Vodafone India issued shares to its Mauritius affiliate for Rs 246 crore at a fair market value of Rs 8,519 a share, for a transaction made during the assessment year 2008-09.

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Bombay High Court refers Vodafone share sale dispute to tax panel - The Economic Times

29/11/13 10:20 pm

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The tax department claimed that the fair market value was Rs 53, 775 a share. The differential amount is being sought to be taxed by the department as income in the hands of the company. "The court passed remarks on the manner in which tax proceedings took place" said Close X Dinesh Kanabar, Deputy CEO, KPMG India. "This is a very satisfactory ruling as court the has directed DRP to consider the preliminary matters on the basis of merits and a specific deadline has been set to deliver the Order. Vodafone has been given the liberty to Stay updated with latest news in telecom sector approach the Court thereafter, if needed," Kanabar added. Loading...

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with our daily newsletter.Read what 10,000+ Industry Leaders everyday for tax free The DRP was set up in read 2009 to deal with income related transfer pricing disputes. It
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was largely meant to sort out tax assessments of foreign firms. The transfer pricing is the Subscribe practice of arm's length pricing for transaction between group companies to ensure that a Invalid Emailis levied. fair price Thank you for subscribing to retail newsletter. We have sent a mail just "Prima facie, theyour share capital orby premium for of shares by an Indian now. Please conrm subscription clicking received on the link inissue the mail. company should be considered a capital receipt and not taxable in India," says Ravishankar Raghavan, Principal -Tax Group, at corporate law firm Majmudar & Partners. "What the tax department is trying to do is to bring that transaction into the transfer pricing ambit as an international transaction which includes capital financing, thereby making a transfer pricing adjustment." Transfer pricing provisions in a cross border transaction will not apply unless there is an 'income' which is arising in such transaction between two related enterprises where at least one of whom is a non-resident.
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"It will be interesting to wait for the finding of the DRP on whether the subscription to the share capital of the Vodafone Group entity in India resulted in any notional 'income' in the hands of the Indian entity," said Sanjay Sanghvi, Partner, Khaitan & Co.

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Bombay High Court refers Vodafone share sale dispute to tax panel - The Economic Times

29/11/13 10:20 pm

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Bring the dispute to a closure sooner than latter so that the perception of investors change from negative to positive.The retrospective law is tantamount to changing the rule after the game is over.If the laws have loop holes,all will take advantage and instead of blaming the author of the law,why penalize who had used for his advantage.

Ramankutty Thekkumpurath (Pune) 3 Hours ago Bronze: 200

The subject is a hot potato to everybody.

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Bombay High Court refers Vodafone share sale dispute to tax panel - The Economic Times

29/11/13 10:20 pm

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