Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

Vodafone wins transfer pricing tax dispute case

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.

  1. 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.
  2. This is likely to benefit multinational companies such as IBM, Royal Dutch Shell and Nokia that face similar tax demands.
  3. Transfer pricing is referred to the setting of the price for goods and services sold between related legal entities within an enterprise.
  4. For example, if a subsidiary company sells goods to a parent company, the cost of those goods is the transfer price.

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