Mumbai court dismisses Vodafone petition in tax case

NEW DELHI (Reuters) - A Mumbai court dismissed a petition by Vodafone Group in a tax dispute with the authorities, ruling on Friday that a tax tribunal should examine the matter first, the British mobile company said.

Vodafone said it has almost 12 weeks to review its options and that the Bombay High Court had extended a stay on a final tax demand order by the authorities.

Last year, Vodafone had filed the petition to the Bombay High Court in a transfer pricing dispute after authorities sought to add 85 billion rupees to the taxable income of a unit, Vodafone India Services Pvt Ltd, which provided call centre services to some group companies.

 

Transfer pricing is the value at which companies trade products, services or assets between units, across borders.

"The Bombay High Court's decision today focused solely on procedure and not on the merits of Vodafone's case," Vodafone said after Friday's court ruling.

Transfer pricing officials in Mumbai declined to comment on the court order.

The dispute relates to accounts for the financial year ending March 2008. Vodafone received another transfer pricing order in February this year over the issue of shares by the same unit. Vodafone has said both disputes are linked.

The cases are separate from a more-than $2 billion tax demand over the British firm's 2007 acquisition of Hutchison Whampoa's <0013.HK> Indian mobile phone business.

Vodafone is currently in talks with finance ministry officials to resolve that dispute.

(Reporting by Devidutta Tripathy. Editing by Jane Merriman)