The Attorney General has asked the Income Tax Department to desist from filing appeal against the Bombay High Court's ruling that Vodafone is not liable to pay an income tax demand of 3,200 crore rupees in a case relating to transfer pricing. Mr Mukul Rohatgi said in New Delhi that he has asked the I-T department to accept the court's judgement. He said, he was in agreement with the view taken by the Central Board of Direct Taxes Chairman in the matter. The Attorney General's opinion comes in the backdrop of reports that the I-T department was keen on challenging the Bombay High Court verdict, which had given a big relief to the UK-based mobile service provider.

The Income Tax Department had, earlier, asked the company to pay additional income tax alleging that it had undervalued its shares in the subsidiary Vodafone India Services while transferring them to the parent company in Britain. The transaction took place in Financial year 2010. Transfer pricing is the practice of arm's length pricing for transactions between Group companies based in different countries to ensure a fair price – one that would have been charged to an unrelated party is levied. Industry chamber FICCI has welcomed the Attorney General's opinion. FICCI had, earlier, suggested that the detailed judgement of the Bombay High Court must be allowed to remain conclusive.