The war for supremacy in the Vodafone transfer pricing controversy has thrown fascinating insights into the brilliant strategies adopted by two of the finest legal minds in the Country, Harish Salve and Mohan Parasaran. Mohan Parasaran has drawn first blood but Harish Salve has his foot firmly in the door. Will Mohan be able to dislodge him? At stake is Rs. 1400 crore
Mohan Parasaran, the wily Solicitor General, has the unenviable job of defending the indefensible. He knows that the weakest link in the department’s case is the merits. On the face of it, the department’s case is unbelievable. Vodafone allotted shares to its holding company as per the FDI norms at a premium of Rs. 8591 per share. The TPO claims that Vodafone should have allotted shares at a premium of Rs. 53,775 per share and that the difference (totaling Rs. 1308 crore) is assessable as income in Vodafone’s hands. How? When a company allots shares at a premium is the premium chargeable to tax as income in the issuer’s hands?