Case Law Details
Vodafone India Services Limited Vs ACIT (ITAT Mumbai)
1. By way of this application, the asses see-applicant seeks a stay on collection recovery of the tax and interest demands, aggregating to Rs 1128.46 crores, in the matter of assessment under section 143(3) r.w.s. 144C of the Income Tax Act, 1961, for the assessment year 2014- 15, till the disposal of the related appeal before us.
2. Briefly stated, some material facts, as culled out from the material on record, are as As we set out our understanding of facts, we must make it clear that as this exercise has been conducted without the benefit of a detailed hearing on these aspects, there may be unreconciled minor variations in our perceptions vis-à-vis that of the assessee, but then, given the limited purposes for which the facts are being set out, nothing much really turns on these variations, even if any. Be that as it may, the assessee company, incorporated in India in March 1999, as 3 Global Services Pvt Ltd, is owned by a Mauritian company now known as Vodafone Tele-Services (India) Holdings Limited [Vodafone Services- M, in short], which, in turn, is owned by a Cayman Islands-based company by the name of CGP Investments (Holdings) Limited [CGP- Cayman, in short]. CGP-Cayman, as a result of the acquisition of its ownership by Vodafone International Holdings BV [VIH-BV, in short] which itself is a fully owned subsidiary of the global telecom giant Vodafone Group plc, UK [Vodafone-UK, in short] which carries on telecommunication business in India, through its operating company Vodafone India Limited [Vodafone-India, in short] and entire shareholding of Vodafone-India is owned by a number of subsidiaries and associated entities controlled by CGP-Cayman Islands, and, during the process of change in ownership and on account of compliance requirements with domestic FDI regulation, through call and put options controlled, directly or indirectly, by CGP-Cayman Islands. Quite unlike what the name of the assessee company may subliminally suggest to a layman, the assessee before us is a small unlisted private company with an authorised capital of Rs. 3 crores and it’s almost entire revenues are generated from the associate enterprise on account of shared services. The importance of the assessee company is thus not in its independent business operations but perhaps in the strategic role it played in structuring the financial transactions for the Vodafone Group, a description typically answered by the companies which are used as a conduit in the process of financial manoeuvrings. It is in this backdrop that the assessee disclosed the following international transaction in the form 3CB filed by the assessee:
Pursuant to Framework Agreement dated 5 July 2007, Analjit Singh and Neelu Analjit Singh (collectively referred to as AS) held a put option, i.e. a right to require the company, or a person nominated by the company, to purchase any or all of the shares held by AS in Scorpio Beverages Pvt Ltd (SBP) constituting 51% of the equity capital of SBP. This put obligation obligated the company, or a person nominated by the company, to purchase the SBP shares when required by AS.
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