I-T dept rejects Voda plea to resolve cases jointly: Source

Responding to Vodafone Group Plc's recent letter on tax dispute, the Income-Tax department has said that the transfer pricing and capital gain are two separate issues and hence the telecom company can not ask for settlement of both cases together, reports CNBC TV18 quoting a source.

The source claimed that Vodafone had asked for settlement of both the capital gain and the transfer pricing case together in a recent letter to the Income Tax department.

In the beginning of current month, the British telecommunication company had received the income tax department's order on the transfer pricing case pertaining to 2007-08 on sale of shares of its Indian unit to a Mauritius-based group company.

Vodafone had disputed the order saying that share subscriptions are not covered by transfer pricing rules either in India or internationally.

Prior to that, the Income Tax authorities had alleged that Vodafone India had under priced its shares issued to Vodafone Teleservices Mauritius by around Rs 1300 crores in 2007-08. It had also challenged the valuation method adopted by Vodafone India for issuing shares to Mauritius based company.

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The British company is already fighting another tax dispute with income tax department regarding its acquisition of controlling stake in Indian telecom unit of the Hong Kong-based Hutchison Whampoa in 2007. The I-T department had raised a tax liability of Rs 11,200 crore for this acquisition.