In a decision aimed at improving the investment sentiment, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday took a decision to not challenge against a Bombay High Court ruling that said Vodafone was not liable to pay a tax demand of Rs. 3,200 crore in a transfer pricing case.

The decision follows Attorney-General Mukul Rohatgi’s advice to the Income Tax Department to not appeal the Bombay High Court judgement.

“The decision to not appeal against the Bombay High Court ruling that was in favour of Vodafone sends out the message to global investors whose confidence in India was shaken in the past… Prime Minister Modi wants it to be known that his government will take decisions that will be fair, transparent and within four corners of the law,” said Union Telecom Minister Ravi Shankar Prasad briefing reporters after the meeting of the Cabinet.

The Bombay High Court on October 10, 2014 ruled against the Income Tax Department’s demand to the company to pay additional income tax alleging that it had undervalued its shares in subsidiary, Vodafone India Services, while transferring them to the parent company in Britain in the year 2010.

Bold step

Vijay Iyer, National Leader – Trasnfer Pricing, EY said, “This is a bold step by the government. It is a huge change in approach and clearly shows their commitment to avoid frivolous litigation. Investors would feel more assured that absurd adjustments would be not be encouraged by the government.” (The Hindu)