Bombay HC Rejects Vodafone's Plea Seeking Blanket Unconditional Stay Of ₹1128.46 Crore Tax Demand For AY 2014-15
The Bombay High Court upheld ITAT’s order which directed Vodafone India Services Pvt. Ltd. (Vodafone) to pay Rupees 230 crore payment, when the original recovery amount was Rupees 1128.46 crores.
The Bench upheld the Income Tax Appellate Tribunal’s (ITAT) order which rejected Vodafone’s application for a blanket unconditional stay on tax and interest demands amounting to ₹1128.46 crores for the assessment year (AY) 2014-15.
A Division Bench of Justice G. S. Kulkarni and Justice Somasekhar Sundaresan observed, “Although we are not inclined to interfere with the impugned order insofar as it directs the petitioner to deposit an amount of Rs.230 crores, being the lowest/minimum amount of 20% of the disputed tax demand, which in our opinion, is clearly in consonance with the provisions of Section 254(2A) of the Act, we find substance in Ms. Sethna’s contention that a partial interference is called for in condition no. (ii) as imposed by the Tribunal.”
Advocate Fereshte Sethna represented the petitioner, while Advocate Suresh Kumar appeared for the respondents.
Vodafone's tax dispute regarding the assessment came around the valuation and taxability of put and call options assigned to the company, which were part of transactions with Hutchison Essar Ltd. (now Vodafone India Ltd.). For AY 2008-09, despite returning an income of Rs. 27.71 crores with no transaction value recorded, the Revenue had determined a transaction value of Rs. 6105.44 crores, resulting in a tax demand of Rs. 3738.49 crores. Vodafone had contested the same.
The ITAT’s impugned order provided a conditional stay on the collection of the disputed tax and interest, subject to Vodafone fulfilling the following conditions:
- Payment of Rs. 230 crores, approximately 20% of the disputed tax demand, within 30 days.
- Furnishing a corporate guarantee from an associate company with unencumbered assets in India exceeding Rs. 900 crores.
The High Court noted that the ITAT’s decision was appropriate with the discretion provided under Section 254(2A) of the Income-tax Act, 1961 (ITA).
“The Tribunal has directed the petitioner to furnish a corporate guarantee from an associate company which has unencumbered assets in India in excess of the balance disputed demands, i.e., Rs.900 crores. In this context, we are of the opinion that such condition ought not to have been directed by the Tribunal in the facts and circumstances of the case and more particularly considering the interim orders passed for the prior years based on the same triggers of exercise of options. Such condition, therefore, is hereby substituted by directing the petitioner to furnish a corporate guarantee of its ultimate parent, namely, Vodafone International Holdings BV, Netherlands,” the Bench remarked.
Consequently, the Court held, “In the light of the above discussion, except what has been modified by us in relation to condition no. (ii) as imposed by the impugned order, we are not inclined to interfere in the impugned order.”
Accordingly, the High Court disposed of the petition.
Cause Title: Vodafone India Services Pvt. Ltd. v. Assistant Commissioner of Income Tax & Ors. (Neutral Citation: 2024:BHC-OS:8749-DB)
Appearance:
Petitioner: Advocates Fereshte Sethna, Mrunal Parekh, Ameya Pant, Ashish Mishra, Coral Shah, Abhishek Tiwari and Snighdha Mishra
Respondents: Advocate Suresh Kumar
