The Bombay High Court on Thursday stayed a new income tax demand of Rs 3,000 crore (Rs 30 billion) on Vodafone India Services in an alleged transfer-pricing case from 2010-11.
The petition was mentioned on Tuesday by Income Tax counsel Beni Chatterjee and Vodafone lawyer Fereshte Sethna before a bench headed by Chief Justice Mohit Shah.
Vodafone pleaded in High Court that IT department had no jurisdiction in the transfer pricing case because the said transaction was not international and did not attract tax.
Wooing overseas investors, government on Wednesday decided against challenging the Bombay High Court decision favouring Vodafone in the Rs 3,200 crore (Rs 32 billion) tax case and adopt a similar approach in transfer pricing litigations involving other MNCs like Shell.
The government, however, amended the tax laws with retrospective effect to undo the Supreme Court judgement and claim taxes.
Vodafone is locked in twin tax disputes with the government.
A court ruled in favour of Vodafone on Friday in a long-running dispute with the Indian taxman, a boost for the British telecom group whose tax battles have been seen as emblematic of the troubles facing foreign investors in India.
The Finance Ministry has already circulated a draft Cabinet note withdrawing the conciliation offer to Vodafone to resolve the Rs 20,000-crore (Rs 200-billion) tax dispute case.
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.
Granted 6-month relief, subject to interim payments and guarantee, on Rs 3,700-cr demand for alleged transfer pricing in FY09.
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