The Petitioner, Vodafone India Services Pvt. Ltd., is a wholly owned subsidiary of a non-resident company, Vodafone Tele-Services (India) Holdings Limited (the holding company).
In AY 2009-10, the Petitioner issued equity shares on a premium to its holding company for its telecommunication services in India which resulted in the Petitioner receiving a total consideration from its holding company on issue of shares in 2008. AO and TPO contended that the shares are to be valued on application of the Transfer Pricing provisions in Chapter X of the Income Tax Act 1961 as against Capital Issues (Control) Act, 1947 and that the shortfall of Rs.1308.91 crores is income which should be treated as deemed loan given by the Petitioner to its holding company and periodical interest thereon is to be charged to tax as interest income of Rs.88.35 crores in the A. Y. 2009-10. The Petitioner contended that Act neither taxes inflow of capital into the country, nor does it create any legal fiction to treat such alleged shortfall in capital receipt on issue of equity shares by an Indian company to its non-resident holding company, as income and thus no question of treating the alleged shortfall as a deemed loan or taxing the alleged deemed interest on a deemed loan arises. The Court ruled in favour of Vodafone India Services Pvt. Ltd.
Detailed judgement has been attached herewithTags : Others