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India will not appeal Vodafone decision

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The Indian government will not be appealing the Bombay High Court’s decision in Vodafone lndia Services Pvt. Ltd AY 2009-10 (WP No.871120).

In a recent press conference, Telecom Minister Ravi Shankar Prasad said: ‘After legally examining [Vodafone, the Cabinet concluded] that the High Court opinion is right, there is no charging section, and this fruitless litigation is avoidable and also in the past. Therefore, a conscious decision has been taken not to file an appeal in the Supreme Court ... The government, led by the Prime Minister Narendra Modi, wants to convey a clear message to investors world over that this is a government where the decisions will be fair, transparent, and within the four corners of the law.’

In a letter to tax officials, the Indian Central Board of Direct Taxes wrote that the principle ‘that the premium on share issue was on account of a capital account transaction and does not give rise to income and, hence, not liable to transfer pricing adjustment’ must be followed. ‘In view of the acceptance of the judgement, it is directed that the ratio decidendi of the judgment must be adhered to by the field officers in all cases where this issue is involved,’ the letter said.

Meanwhile, Vodafone in the UK released its annual tax sustainability report, featuring ‘in focus’ special reports on multinationals, governments and tax, the OECD BEPS project, as well as a section on ‘why Vodafone pays little to no UK corporation tax’. The technology editor of The Times, Nic Fildes, in a tweet, described the document as ‘Vodafone’s annual “tax defence” document’ and observed it contained ‘a hefty section on why Luxembourg is not a tax haven’.