Vodafone conciliation only after settlement of transfer pricing dispute

Vodafone conciliation only after settlement of transfer pricing disputeThe Indian Government will review the conciliation process with Vodafone over Rs 20,000-crore tax dispute only after a transfer pricing case pertaining to the telecom operator is settled, a senior finance ministry official said.

Requesting anonymity, the government official said that the Union Cabinet decided to instruct the Income Tax Appellate Tribunal (ITAT) to expeditiously solve the Vodafone transfer pricing case.

Speaking about the decision, the official said, "The Cabinet has decided to instruct the Income Tax Appellate Tribunal (ITAT) to expeditiously solve the Vodafone transfer pricing case. Once that is done, the Cabinet will review the conciliation process."

It may mean that the case would be resolved only by the new government because the hearing by the ITAT, which is scheduled to start on March 19, may consume many weeks, while only around a couple of months are left for general elections.

In June 2013, the government had agreed to settle the Rs 20,000-crore tax dispute case through a conciliation process with the Indian arm of British telecom giant, but the government withdrew from the conciliation process after the company insisted on clubbing its Rs 8,500-crore transfer pricing case with the tax dispute case.

Vodafone India has been battling with the Income Tax department on the capital gains tax dispute relating to acquisition of a stake in Hutchison Essar in 2007. The tax demand in the case was Rs 7,990 crore, but the addition of penalty and interest inflated the amount to Rs 20,000 crore.




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