The Income Tax Department mentioned Friday it had carried out pan-India search and seizure operations towards a number of “foreign controlled” cellular communication and handset firms for tax evasion by inflating bills and never revealing remittance in nature of royalty.
The operations came about on December 21 throughout 11 states — Karnataka, Tamil Nadu, Assam, West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Bihar, Rajasthan, Delhi, and a few components of NCR. “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 location abroad, which aggregates to more than Rs 5,500 crore. 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 mentioned in a launch.
It additionally discovered that the businesses borrowed international funds of as much as Rs 5,000 crore, with out following due course of, the supply of which had been uncertain, with “no credit worthiness” of the lenders.
Apart from this, the businesses additionally indulged in inflation of bills, which led to discount of taxable profile to the quantum of Rs 1,400 crore. One of those firms, the division mentioned, used the providers of an organization situated in India however didn’t adjust to the provisions of tax deduction at supply (TDS), with the overall legal responsibility of TDS not deducted amounting to as much as Rs 300 crore.
“In case of another company …, it has been detected that the control of the affairs … was substantively managed from a neighbouring country. The Indian directors … admitted they had no role in the management of the company and lent their names for directorship for namesake purposes. Evidences have been gathered on attempt to transfer the entire reserves of the company to the tune of Rs 42 crore out of India, without payment of due taxes,” the division mentioned.
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