Addition of 8434 Crores - Vodafone loses Writ in Bombay High Court
IT was a high radiation battle - the petitioner was the mobile monarch Vodafone - in action were the top lawyers of the Country and issue involved addition of 8434 Crores of rupees to the income of the assessee.
The only issues involved were whether the TPO had jurisdiction and whether the High Court could entertain a writ when ample alternate remedy was available. In a massive judgement running into 239 pages, the High Court held that that the writ was not maintainable and dismissed it.
The petitioner seeks a writ of certiorari to quash and set aside a Transfer Pricing Order dated 31st October, 2011, passed by Additional Commissioner of Income-tax, Transfer Pricing (“the TPO”) to the extent that it relates to the addition of Rs. 84,34,39,52,555/- on account of two unreported international transactions and a Draft Assessment Order dated 29th December, 2011, passed by respondent Assistant Commissioner of Income-tax (“Assessing Officer”). The petitioner has also sought a writ of mandamus directing the AO to revise the Draft Assessment Order, after excluding the said transfer price adjustment. Lastly, the petitioner seeks a writ of prohibition, prohibiting the respondents from taking any steps pursuant to the impugned orders.
The two unreported transactions are the sale of the call centre business by the petitioner to Hutchison Whampoa Properties (India) Pvt. Ltd. and an alleged assignment of call options by the petitioner to Vodafone International Holdings B.V. The TPO determined the arm's length price of these two unreported transactions suomoto in exercise of powers under sections 92CA(2A) and/or (2B) of the Income Tax Act, 1961. The petitioner has challenged the jurisdiction of the TPO to determine the arm's length price of these transactions on various grounds. The respondents, apart from denying this case, have contended that the Writ Petition is not maintainable on the ground that the petitioner has an alternate remedy under the provisions of the Income Tax Act, 1961, and on certain other grounds
Far from questioning the TPO's jurisdiction to consider an unreported international transaction, the petitioner, in fact, submitted to his jurisdiction in this regard. The petitioner filed submissions before the AO in which, for the first time, it objected to the exercise of the jurisdiction by the TPO over the unreported international transactions.
The High Court held,
We must keep in mind that it is not for us in this writ petition to consider the merits of the rival contentions in detail with a view to deciding the same. It is necessary for us only to examine whether the petitioner has clearly established that there is a patent or inherent lack of jurisdiction in the TPO on account of the transaction being clearly a domestic transaction and not an international transaction; that there is nothing to be considered in the matter on behalf of the respondents and that the respondents have clutched at jurisdiction although they had none.
In the result, we are unable to agree with the contention that the TPO's lack of jurisdiction to consider the transaction relating to the sale of the call centre business / BTA is so obvious and clear as to entitle the petitioner to invoke the extraordinary writ jurisdiction of this Court instead of being compelled to file an appeal before the ITAT. It cannot be said that he "clutched at jurisdiction" or that his decision with respect to the jurisdictional facts was "so patently and loudly obtrusive" that it has left on it "an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision" and, therefore, warrants interpretation in a writ petition. There are several issues of fact and of law on every material aspect which must be considered by the authorities under the Act. This is not a fit case for invoking the extra-ordinary jurisdiction under Article 226.