The income tax department of India has allegedly found Chinese telecom company Huawei being involved in the manipulation of account books for lowering its taxable income in India.

The searches were conducted 2 weeks earlier at the residential premises and principal business of crucial office bearers of a multi-national group, involved in the distribution of telecom products and offering captive software development services, said the Central Board of Direct Taxes (CBDT) in a statement.

The company was identified as Huawei by sources.

As per the statement issued by the policy-making body of the tax department, the eventual shareholding of the group deceits with a foreign entity of a neighboring country.

The CBDT assumes that the group manipulated its account books for reducing its taxable income in India via the creation of some provisions for expenses like provisions for obsolescence, doubtful debts/loans and advances, provisions for warranty, etc., which have slight or no scientific/financial rationale.

The group was failed to provide any appropriate or substantial justifications for such claims during the investigation, it alleged.

The company had said that it was firmly compliant with the laws of India during the investigations.

As per a statement released by the firm, Huawei is confident about its operations in India are firmly compliant with all regulations and laws. The firm will be approaching related government departments for more information and will be co-operating entirely as per the rules and regulations and following the right process.

Furthermore, the gathered evidence and statements recorded during the search also expose that one of the group entities involved in offering software development services has been relating to lower net margins from the related parties by appealing its operations to be low-end nature.

Although, the proofs collected during the searches imply that this entity has been executing significant services/operations of high-end nature.

Suppression of income of Rs 400 crores (USD 52 million) has been detected due to this aspect, it claimed. Moreover, the Indian government has set aside Huawei from 5G service trials.

Source Credit - https://www.businesstoday.in/industry/telecom/story/india-accuses-huawei-of-tax-evasion-report-324622-2022-03-03