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Huawei sent huge sums of money to its parent company even as revenue fell: its IT division

Huawei sent huge sums of money to its parent company even as revenue fell: its IT division

Huawei sent huge sums of money to its parent company even as revenue fell: its IT division

Image: iStock

The income tax department alleged that Huawei India transferred huge sums of money to its parent company in China in the form of dividends, which reduces taxable income here.
Management said the company turned in Rs 750 crore even as Indian revenue fell, alleging significant differences in reported income by Huawei India Telecom in the last two years.

The Information Technology Department froze the company’s bank accounts in February after raids on its headquarters, accusing it of tax evasion. The Delhi High Court in April suspended the attachment of the company’s accounts following an appeal by Huawei India and requested the IT department’s response. The Economic Times reported that the department filed its charges against the company in responses sent out last week.

In its response, the IT department justified the seizure and called Huawei’s petition “a ploy raised on frivolous grounds merely to obstruct the administration’s actions and avoid paying consequential taxes.” The administration claimed that it had incriminating evidence against the company.

The department also said that Huawei India had not produced its account books “yet”, making it “impossible to ascertain the correctness of the income reported by the company”.

Huawei is one of the companies facing tough scrutiny in India along with other Chinese tech companies like Vivo and Xiaomi.

In its investigation against Chinese smartphone maker Vivo, the Enforcement Directorate said it found that the company had diverted around 50 percent or Rs 62,476 crore of its sales to China to avoid paying taxes in India. ED also seized funds worth Rs 465 crore, Rs 73 lakhs in cash and 2 kg gold under Anti-Money Laundering Act.

ED conducted searches at 48 locations across the country belonging to VIVO Mobiles India Pvt. Ltd. and its 23 associated companies, and booked a balance of Rs. 465 crore in 119 bank accounts, including billing contracts worth Rs. 66 crore from Vivo India , 2 kg of gold bars, and Rs. 73 lakh cash,” the agency said.