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Voda bid to club tax claims

New Delhi, Jan. 2 (PTI): British telecom major Vodafone, which has submitted its response to an offer of non-binding conciliation to resolve a tax dispute, has suggested that all tax claims against the company be clubbed together for settlement.

Vodafone, according to sources, in its response to the finance ministry’s offer for conciliation, had expressed keenness to settle the long-pending capital gains tax dispute.

The company suggested that a transfer pricing case before the income tax appellate tribunal should be clubbed with the Rs 11,200-crore capital gains tax dispute, the sources said.

“Vodafone is likely to meet finance ministry officials this month. They have said they are keen on further conciliation talks,” according to the sources.

The tribunal last week stayed a Rs 3,700-crore tax claim by the income tax department on Vodafone India in a transfer-pricing dispute and asked the company to deposit Rs 200 crore as initial payment and submit bank guarantees for the remaining sum.

“Vodafone is pushing for early resolution of the transfer-pricing case.

It also wants bundling of all tax cases against it for settlement,” the sources added.

The Rs 11,200-crore tax dispute relates to Vodafone’s 2007 acquisition of Hutchison Whampoa’s stake in Hutchison Essar.

The transfer-pricing case concerns Vodafone’s issue of shares in its Pune-based BPO arm Vodafone India Services to Vodafone Teleservices Mauritius for Rs 246.38 crore in 2007-08, which, according to the income tax department, was undervalued.

The cabinet had approved non-binding conciliation with the British telecom major in June last year. The outcome of the conciliation, however, will need to be ultimately vetted by Parliament as it will require an amendment to the I-T Act.

The government is also keen to settle the dispute even as the I-T Act can be amended only when the full budget is presented by the next government around the middle of this year.

The conciliation has been proposed under the Indian arbitration law and not under the United Nations Commission on International Trade Law as sought by Vodafone.

No time frame has been set to conclude the proceedings.

The Supreme Court had ruled in Vodafone’s favour in 2012, saying it was not liable to pay any tax over the acquisition of assets in India from Hong Kong-based Hutchison. The government, later in 2012, changed the rules to enable it to make retrospective tax claims on concluded deals.

DOUBLE DISPUTE

• A Rs 11,200-crore capital gains tax dispute concerning Vodafone’s acquisition of Hutchison Whampoa’s stake in Hutchison Essar in 2007
• A Rs 3,700-crore tax claim in a transfer pricing case. Vodafone had issued shares in Pune-based BPO arm Vodafone India Services to Vodafone Teleservices Mauritius for Rs 246.38 crore in 2007-08. I-T department says deal undervalued

 
 
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