In a major relief to British telecom major Vodafone in the transfer pricing case, the Bombay High Court ruled in its favour, setting aside a tax demand of Rs. 3,700 crore imposed on Vodafone India.
- The case of 2007-8 involving the sale of Vodafone India Services Private Ltd., to Hutchison, and the tax authorities demanded capital gain tax for this transaction.
- This is likely to benefit multinational companies such as IBM, Royal Dutch Shell and Nokia that face similar tax demands.
- Transfer pricing is referred to the setting of the price for goods and services sold between related legal entities within an enterprise.
- For example, if a subsidiary company sells goods to a parent company, the cost of those goods is the transfer price.