The Free Press Journal

HC upholds ITAT order asking Voda to deposit `230 cr

The Bombay High Court has upheld the order of Income Tax Appellate Tribunal (ITAT) which directed Vodafone India Services Pvt Ltd to pay Rs230 crore, when the original recovery amount was Rs1128.46 crore for the assessment year (AY) 2014-15. The high court also upheld the ITAT’s order which rejected Vodafone’s applicatio­n for a blanket unconditio­nal stay on tax and interest demands amounting to Rs1128.46 crore.

The HC was hearing an appeal filed by Vodafone challengin­g the ITAT order of July 19, 2021. The telcom company’s tax dispute arose over the valuation and taxability of put and call options assigned to the company.

For AY 2008-09, Vodafone had returned an income of Rs27.71 crore with transactio­n value in relation to exercise of put and call options being Nil. However, the revenue authority had arrived at a figure of Rs6,105.44 crore which resulted in the tax demand of Rs3738.49 crore.

This was challenged by Vodafone before the ITAT. The tribunal granted a conditiona­l stay on the disputed tax and interest amount subject to Vodafone paying Rs230 crore, which is approximat­ely 20% of the amount within 30 days. It also directed Vodafone to furnish a corporate guarantee from an associate company.

For AY 2008-09, it had deposited Rs230 crore and submitted a corporate guarantee of Rs3538.49 crore from its parent company Vodafone Internatio­nal

Holdings BV, Netherland­s.

Vodafone’s advocate Fereshte Sethna contended that the tribunal ought to have appreciate­d that there was sufficient security available with the department so as not to insist on a further deposit in relation to the impugned assessment order.

Advocate Suresh Kumar, appearing for the Income Tax department, opposed the plea contending that considerin­g the facts of the case and by applying the settled principles of

The HC rejected Vodafone’s plea for a blanket unconditio­nal stay on tax and interest demands of `1128.46 crore

law, the Tribunal has passed the conditiona­l order.

The high court modified the order to the extent of furnishing corporate guarantee.

“We are of the opinion that such condition ought not to have been directed by the Tribunal in the facts and circumstan­ces of the case and more particular­ly considerin­g the interim orders passed for the prior years based on the same triggers of exercise of options. Such condition, therefore, is hereby substitute­d by directing the petitioner to furnish a corporate guarantee of its ultimate parent, namely, Vodafone Internatio­nal Holdings BV, Netherland­s,” the court said while disposing off Vidafone’s plea.