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The Bombay High Court has adjourned the hearing of the Rs 8,500-crore Vodafone India transfer pricing case to October 5.
In February, Vodafone had challenged the Income-Tax Department’s jurisdiction in issuing a draft transfer pricing order that sought to add Rs 8,500 crore to the taxable income of Vodafone.
The draft transfer pricing order, issued in December 2011, related to the transaction on Vodafone’s call centre business.
Transfer pricing, or what is referred to as ‘arm’s length principle’, is to establish analysis of pricing in comparable transactions between two or more unrelated parties.
A dispute resolution panel is also simultaneously hearing Vodafone’s appeal against tax liability. In January, the company had also filed its objections to the draft transfer pricing order before the panel.
If the transfer pricing adjustment of Rs 8,500 crore were to be confirmed, then Vodafone may face a tax bill of Rs 2,805 crore on this account, tax experts said.
The I-Tax Department had raised a tax demand of Rs 11,218 crore (including Rs 7,900 crore of tax and the remaining interest) on Vodafone for the $11.2-billion deal with Hutchison.
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