Huawei now accused by Income Tax dept! See what is the issue this time

Huawei has been accused by the Income Tax Department of sending huge sums of money even as its revenue fell. Here are details.

The tax department had previously frozen the bank accounts of Huawei after conducting a search operation in its premises and accusing it of tax evasion. (Reuters)

After the recent cases on Chinese smartphone brands like Xiaomi and Vivo, Huawei is now under the scanner. The Income Tax Department has accused Huawei of sending large amounts of money to its parent unit in China in the form of dividends, thereby reducing its taxable income. The IT department has claimed discrepancies in the declared income by Huawei, saying that the “company had repatriated Rs. 750 crore even when its revenue was reducing drastically".

The tax department had previously frozen the bank accounts of Huawei after conducting a search operation in its premises and accusing it of tax evasion. Huawei had denied doing anything wrong and said to the court that the attachment of the accounts without any notice had affected its business. In response, the tax department described Huawei's petition as "a ploy raised on frivolous grounds just to obstruct departmental proceedings and to avoid consequential payment of taxes".

Huawei now accused by the IT department

The tax department also claimed that it had possession of "incriminating material" against the company. It also said that the company had not produced its books of accounts "till date", thereby making it "impossible to ascertain the veracity of the income declared by the company".

“The department also said Huawei India did not give it access to the email of Yang Yi, the chief financial officer who was the decision-making authority on transfer-pricing issues. It is imperative to examine the communications to understand the full import of the financial transactions and the reasoning behind them, it said. But the request was denied on the ground that the email could have data unrelated to the company,” said the Economic Times report.

In other news, Xiaomi and Vivo were recently examined by the ED for money laundering cases. Both companies have suggested otherwise and are currently investigated for the same.