India: High Court gives option to Vodafone to again file writ if decision of Dispute Resolution Panel is ‘patently illegal’

Tax Controversy & Dispute Resolution ()

The much-awaited ruling of the Bombay High Court (HC) in the context of the writ application filed by Vodafone India Services Pvt Ltd (VISPL or the taxpayer) has been released. The taxpayer had challenged the following transfer pricing (TP) adjustments made by the Revenue:

  • Alleged undervaluation of shares issued by VISPL in favour of its associated enterprise (AE).
  • Imputing of notional interest on such alleged undervaluation of shares, by treating the shortfall as loan advanced by VISPL to its AE.

The taxpayer challenged these adjustments as being patently illegal and without jurisdiction. This was on the ground that the purported undervaluation could never have been brought under the ambit of taxation by taking course to TP, as the same was on capital account.