New Delhi, Dec 31 : In a pan-India raid against foreign mobile manufacturers, the Income Tax (I-T) department has alleged that dubious loans to the tune of Rs 5,000 crores flowed into the companies from abroad.
The department also claimed that two major handset-makers made remittance of more than Rs 5,500 crores in the nature of royalty but such expense claim does not seem appropriate in light of the facts and evidence gathered during the search action.
The search and seizure operations against the companies were carried out on December 21 covering various premises across 11 states.
“The search action has revealed that two major companies have made remittance in the nature of royalty, to and on behalf of its group companies located abroad, which aggregates to more than Rs 5,500 crores. The claim of such expenses does not seem to be appropriate in light of the facts and evidence gathered during the search action,” the I-T department said in a statement.
It further said that both the companies had not complied with the regulatory mandate prescribed under the Income-tax Act, 1961 for disclosure of transactions with associated enterprises.
“Such lapse makes them liable for penal action under the Income-tax Act, 1961, the quantum of which could be in the range of more than Rs 1,000 crore,” the tax department said.
On funds received from abroad, the department said that foreign funds had been introduced in the books of the Indian company but it transpires that the source from which such funds have been received are of doubtful nature, purportedly with no credit worthiness of the lender.
“The quantum of such borrowings is about Rs 5,000 crore, on which interest expenses have also been claimed,” the statement said.
The I-T department has also alleged that the companies inflated expenses and payments on behalf of associated firms leading to reduction of taxable profits.
“Such amount could be in excess of Rs 1,400 crore,” the I-T department said.
It has been further alleged that one of the companies utilised the services of another entity located in India but did not comply with the provisions of tax deduction at source (TDS). The quantum of liability of TDS on this account could be around Rs 300 crores.
“In case of another company covered in the search action, it has been detected that the control of the affairs of the company was substantively managed from a neighbouring country. The Indian directors of the said company admitted that they had no role in the management of the company and lent their names for directorship for namesake purposes,” the I-T department said.
The department noted that survey action in the case of certain fintech and software services companies revealed that a number of such companies have been created for the purposes of inflating expenses and siphoning out of funds.
“For this purpose, such companies have made payments for unrelated business purposes as also utilised the bills issued by a Tamil sNadu based non-exitent business concern. The quantum of such out-flow is found to be around Rs 50 crores,” it said.(UNI)