Eye on FDI, Centre may not Appeal Voda’s Rs 3k-cr Relief

Meeting On FDI In Ecommerce www.ambitionias.com
  • Attorney-general Mukul Rohatgi has advised the income-tax department not to appeal against a Bombay high court order in the Rs 3,200-crore transferpricing case involving global telecom giant Vodafone
  • This move is expected to bolster investment sentiment.
  • Rohatgi told: I've advised that we should accept the order because allotment of shares is capital receipt and not income and the judgment says so,
  • He also added that he has advised against filing an appeal in the Supreme Court.
  • In doing so, the government's top law officer has over-ruled the solicit orgeneral, who, in October, advised government to appeal in the apex court.
  • Rohatgi has gone with the advice given by the chief commissioner, income tax, and chairman, Central Board of Direct Taxes, who had suggested that the government desist from appealing.
  • The high court had said the British mobile service provider was not liable to pay
  • The High Court asked the company to pay additional income tax alleging it had undervalued its shares in the subsidiary Vodafone India Services while transferring them to the parent company in Britain.
  • The case was in addition to the Rs 11,000-crore dispute related to capital gains tax on Vodafone's buyout of Hutch's interest in the Indian telecom firm, which is under arbitration.
  • The move, aimed at boosting business sentiment, may set a precedent as the government is involved in transfer-pricing cases.
  • The stance in the Vodafone transfer-pricing case reflects the government's intent to regain the trust of investors
  • Many of the investors had shunned India in recent years, citing “unreasonable“ tax demands.
  • The government has taken steps to make the tax department more taxpayer-friendly .