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No tax respite for IT firms
BS Economy Bureau in New Delhi |
April 21, 2004 07:47 IST
The finance ministry on Tuesday ruled out a clarification on the recent notices slapped by its income tax officers on software companies including Wipro Ltd.
PL Singh, chairman, Central Board of Direct Taxes, on Tuesday said in a press conference, that the notices were sent based on the interpretation of the provisions of Section 10A and 10B of the Income-Tax Act.
"There is no plan to change the enabling provisions of the section now. The cases will be heard by the Commissioner (Appeals) and a decision by the tax tribunal will be awaited," he said.
The issue pertains to a tax demand of Rs 261.4 crore (Rs 2,614 million) including interest demand of Rs 76.4 crore (Rs 764 million) received by Wipro Ltd during the last fiscal.
In its notes to accounts, Wipro said, "According to the company's legal counsel, the disallowance by the tax authorities is not tenable. The management believes that there will be a positive final outcome and there is no material impact on the financial statement."
According to income tax officials, to qualify for an exemption under Section 10A, the company should have set up new units and not just expanded the existing units.
And to prove this, Wipro was required to provide separate books of accounts and profit figures for the units for which tax deduction was being claimed.
The company did not furnish these and hence the concerned I-T officer raised the demand, they said.
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