May 27, 2013 3:02:25 am
After WNS and Infosys,iGate is the latest to face tax issues in India with the US-based outsourcing firm having an unsettled tax demand of $132.7 million (about Rs 738 crore) for assessment years 2004-05 to 2009-10.
iGate said these demands are not tenable and the NASDAQ-listed firm has approached the requisite appellate authorities.
As of March 31,2013,the company has open tax demands of $132.7 million for relevant assessment years 2004-05,2005-06,2006-07,2007-08,2008-09 and 2009-10, the firm said in a filing to the US Securities and Exchange Commission (SEC).
On the tax demands,the filing says: The assessment order demand is raised mainly on account of disallowance of certain benefits under section 10A of the Indian Income Tax Act and transfer pricing adjustment on account of interest on delayed recoveries from associated enterprises.
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Although,iGate has paid an amount of $14.16 million in relation to these demands,which are pending at various levels of appeals,management considers these disallowances as not tenable against the company and therefore no provision for tax contingencies has been established related to unpaid amounts,the filing added.
When contacted,a iGate spokesperson said: Majority of the unsettled tax demand for the mentioned period is mainly on account of disallowance of Section 10A benefits of the Indian Income Tax Act. Management considers these demands as not tenable and the matter is pending at various levels of appeal.
Under the Indian Income Tax Act iGate Global and iGate Computer are eligible to claim an income tax holiday on profits derived from the export of software services from divisions registered under Special Economic Zones arrangements,the filing said.
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