New Delhi: The Supreme Court has issued a notice to Moser Baer India Ltd why it should not be asked to pay income tax to the tune of Rs 2,978 crore.
A bench headed by Justice S H Kapadia sought the reply from the manufacturer of computer-related products, including floppies and compact discs, on the income tax department`s plea alleging that the company had evaded tax in 2000-01.
The department said that the company was not entitled to deduction even though the value of export of CDs was less than 75 percent of the total sales made during 2000-01.
It said the Delhi High Court should have appreciated that the assessing officer was right in observing that Moser Baer under its export obligations under the EXIM policy was treating the stock transfer as export and FOB invoice value as sales whereas the stock transferred to its Rotterdam branch remained part of its closing stock, thus increasing its gross profit.
Additional Solicitor General Mohan Parasaran and Gaurav Dhingra said the High Court was wrong in holding that the stock transfer to the company`s Rotterdam unit was to be treated as deemed export sales out of India.
According to both, there was no actual sale and no
realisation in convertible foreign exchange during the year
took place. Citing Moser Baer`s profit and loss statement
account, the government said if there was a sale to a foreign
branch, then why was the stock transferred entry reversed in
the books of account at the end of the financial year.