Delhi HC halts Rs 329 crore penalty on Vivo, Oppo faces Rs 5,000 crore tax heat
Delhi HC stayed a Rs 329 crore tax penalty on Vivo amid transfer pricing disputes, while Oppo faces a Rs 5,000 crore demand, highlighting intensifying scrutiny of Chinese smartphone makers in India.
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The Delhi High Court on Thursday granted interim relief to Vivo Mobile India by staying a Rs 329 crore penalty imposed by the Income Tax Department, marking another flashpoint in the ongoing tussle between Indian authorities and Chinese smartphone makers, The Economics Times reported.
The penalty, levied by the Transfer Pricing Officer (TPO), alleged that Vivo failed to disclose its group holding structure, associated enterprises, and details of international transactions including royalty payments to its Chinese parent. Oppo India, facing a much larger penalty of nearly Rs 5,000 crore for seven assessment years, has also secured a stay on similar orders.
A division bench led by Justice V. Kameshwar issued notice to the tax department and scheduled the matter for hearing on September 23.
Senior counsel Arvind P. Datar, representing Vivo, called the penalty “wholly without jurisdiction, arbitrary and perverse,” arguing that it contravenes provisions of the Income Tax Act and breaches natural justice principles. He further pointed out that assessment proceedings for 2019–20 remain incomplete, making the penalty premature under Section 275 of the Act.
The case reflects intensifying tax scrutiny of Chinese smartphone companies operating in India. Vivo, a subsidiary of Hong Kong-based Multi Accord, and Oppo, another major Chinese brand, have been under investigation for transfer pricing practices and royalty payments routed to their parent companies.
In Vivo’s case, the TPO had earlier proposed adjustments worth over Rs 1,350 crore on royalty and advertising expenses, later citing non-compliance in documentation to justify the penalty under Section 271G. Vivo maintains it filed nil income for the relevant year and was in compliance with statutory requirements.
