MUMBAI: In a major relief to Indian subsidiary of British telecom major Vodafone , the Bombay High Court has set aside an order of Income Tax Appellate Tribunal which had ruled that I-T had the powers to raise tax demand on the company in a Rs 8500 crore transfer pricing case. The transfer pricing case dates back to FY08 relating to sale of one of its call centres in Ahmedabad in 2007.On Thursday, the division bench comprising SC Dharmadhikari and AK Menon said in an oral order that relying upon the earlier Supreme Court judgment, the court is of the view that there is no transfer of the 'call options' and hence the transaction is not falling within the purview of transfer pricing. The detailed order was not uploaded on the court website till the time of going to press."verdict of the Bombay high court reaffirms justice for Vodafone and an excellent signal for foreign investors into India," said Fereshte Sethna, senior partner of law firm DMD Advocates, who is representing Vodafone India in the case. " Bombay High Court has struck down the stand of the tax authorities premised inter alia on the fundamental position that tax exigibility of the transaction was already considered by the Supreme Court back in 2012 - the Indian tax office stance to bring an Indian subsidiary to tax on the very transaction was rightly not countenanced by the court."The dispute relates to the sale of the Ahmedabad-based call centre business (Vodafone India Services formerly known as 3 Global Services) for assessment year 2008-09. The department slapped a tax demand on the company on October 31, 2012 under sections 143(3) and 144C (13) of Income Tax Act.The I-T department had slapped a transfer pricing order against Vodafone's India arm seeking to add Rs 8,500 crore to its taxable income for FY 2007-08. The demand was challenged by the telecom company in the income tax appellate tribunal ( ITAT ).However, in December 2014, the tribunal ruled that sale of call-center biz was an international transaction and assignment of call options took place. And therefore the revenue department has the jurisdiction to proceed against the company. Later, the company had challenged the order in the Bombay High Court.The income tax department had issued an order following scrutiny of a call centre deal struck in 2007 (sale of Vodafone’s call centre business to Hutchison Whampoa Properties India). The revenue authorities claimed that the deal was an “undisclosed, international transaction” and therefore transfer pricing norms applied to the case."The judgment adds to the relief rally been seen by Vodafone in its tax disputes and reinforces the trust of the taxpayer in the Indian judiciary, which has not shying in giving favourable orders, even in high stake cases," said Rakesh Nangia, managing partner of tax advisory Nangia & Co.While, challenging the jurisdiction of the revenue authorities over the transaction, the Vodafone maintained that no assignment of call options took place during the transition and hence it wasn't an international transaction and therefore transfer pricing provisions did not apply and the deal was not taxable.Transfer price is the amount used in accounting for transfer of goods or services from one place to another or from one company to another which belongs to the same parent companyThe tribunal, however, did not accept the valuation arrived at by the tax department and asked the authority to arrive at a correct valuation. It sent the case back to the tax authority to decide on the revised amount of the taxable income of Vodafone India.Subsequently, Vodafone had challenged that order in the Bombay High Court.