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Xiaomi Technology India: Today the Chinese company Xiaomi has got relief from the Karnataka High Court. The High Court has set aside the decision of the Deputy Commissioner of Income Tax Department, Bengaluru, in which the department had issued an order to confiscate the Fixed Deposit (FD) of Rs 3,700 crore of the company. However, the court has imposed certain conditions on the company regarding payment.
No decision based on guesswork
In its decision, the High Court has termed the decision of the Deputy Commissioner of Income Tax Department, Bangalore as wrong. The court said that such decisions are not correct only on the basis of conjecture. The court had said in its decision that no reason was given in the order as to why this property was being frozen.
Justice SR Krishna Kumar, in his judgment of 16 December, has quashed the seizure order of the Deputy Commissioner of Income Tax. The Deputy Commissioner of Income Tax had issued the seizure order on August 11, 2022.
Know what the court said
On this whole matter, the court said that till the completion of the assessment, Xiaomi will not be able to pay any company or institution located outside India as royalty or in any other form from these fixed deposit accounts. Xiaomi is free to take overdrafts from fixed deposit accounts (FD) and make payments to companies or entities located outside India from the overdraft facility.
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The Court has directed the Income Tax Department to complete the draft assessment proceedings of the petitioner for assessment years 2019-20, 2020-21 and 2021-22 on or before March 31, 2023. The Income Tax Department had passed the seizure order on the grounds that the Chinese company was sending its earnings abroad under the guise of paying royalty to avoid paying taxes in India.
Biggest seizure ever in India
The court said in its decision that there should be a direct connection between the purpose of attachment and its use. Mere apprehension that a substantial demand of tax may arise on completion of assessment cannot be a ground for issuing provisional order of attachment.
accused of tax evasion
Earlier, in September itself, the FEMA authority approved the order to seize Rs 5,551 crore deposited in the bank accounts of Chinese mobile phone manufacturer Xiaomi. This is the biggest seizure ever in India. The company is alleged to have shown the wrong price of equipment purchased from its contract manufacturing companies for tax evasion in the country, due to which it saved tax by showing higher cost. At the same time, he is also accused of sending a huge amount out of the country.
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