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Informist, Thursday, Aug. 28, 2025

 

NEW DELHI – The Delhi High Court Thursday stayed the recovery of a penalty of INR 3.29 billion from Vivo Mobile India Pvt. Ltd. by the Income Tax Department. The recovery has been stayed till Sept. 23, when the court will hear Vivo Mobile's challenge against the demand.

 

The court passed a similar order on the recovery of a penalty from Oppo Mobiles India Pvt. Ltd., noting that the two cases were similar. It has asked the tax department to reply to both companies' petitions.

 

Vivo Mobile's case has its genesis from the company filing its income-tax return for the assessment year 2019-20 (Apr-Mar) under section 148 of the Income Tax Act, 1961. The company had declared null income. The return was selected for scrutiny and a notice was issued under Section 143(2) of the Act.

 

In February 2024, the tax department made a reference to the transfer pricing officer to determine the arm's length price of the international transactions made by Vivo Mobile. In January, the transfer pricing officer passed an order proposing an adjustment of INR 6.7 million towards payment of royalty to Vivo China and INR 12.84 billion towards advertisement, marketing, and promotion expenses.

 

Consequently, the transfer pricing officer issued a show-cause notice to Vivo Mobile to impose a penalty under Section 271(G) of the Act. The officer said the company had failed to furnish the information requested by the tax department during proceedings under Section 92(C)(A) of the Act. Rejecting the company's reply, the officer passed an order levying a penalty of INR 3.29 billion on the company. Thereafter, the tax department issued a demand notice to Vivo Mobile for the penalty. 

 

Vivo Mobile argued that the tax penalty order was, on the face of it, "wholly without jurisdiction, illegal, arbitrary, perverse" and in contravention of mandatory provisions of the Income Tax Act, besides being in breach of the principles of natural justice. It urged the court to quash the order.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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