The Income Tax Appellate Tribunal (ITAT) has ruled that the Income Tax (I-T) department has jurisdiction in the Rs 85 billion transfer-pricing tax dispute involving the sale of Vodafone India’s call centre business to Hutchison Whampoa in 2007. The tribunal however does not agree with the tax valuations of the I-T department and gas asked the authority to arrive at a correct/suitable valuation.

The case pertains to Vodafone India challenging I-T department’s draft transfer order in 2012, which directed the operator to add Rs 85 billion to its taxable income for 2007-08. As a consequence, the I-T Department asked the company to pay tax of Rs 37 billion. Vodafone India then filed a petition in the Bombay High Court, stating that the concerned transactions were made with regards to its international business.

In September 2013, the high court stated that ITAT had right to intervene in the matter. Consequently, ITAT stayed the demand for another six months and directed Vodafone to pay a deposit of Rs 2 billion and provide corporate guarantees of Rs 35 billion. Following the ITAT order, the I-T department filed a rectification plea in the Bombay High Court on January 2014 asking the tribunal to lift the stay order. On February, 2014, the high court directed ITAT to hear the transfer-pricing tax dispute on a daily basis till a final order is passed.