The Company paid its parent company for consulting
services and included these amounts in its income tax expenses. The Company
also claimed input VAT deductions for these amounts. The consulting services were related to the
smooth sale of the Company itself. The tax authority deemed these expenses
unrelated to the Company's core business activities and declared the tax
deductions illegal. This position was upheld by both the court of first
instance and the appellate court. However, the Supreme Court clarified that,
although the consulting was initiated by the parent company ahead of a sale,
the services benefited the Company's own business operations. Expenses for
efficiency measures are considered incurred "to acquire and retain
income" and are therefore deductible.