| PwC has a chequered past with taxmen | |
| Prashant K Sahu / New Delhi January 09, 2009, 0:02 IST | |
PricewaterhouseCoopers (PwC), an advisory and consulting firm whose sister company audited the accounts of Hyderabad-based Satyam Computer Services, has a chequered past with Indian tax authorities, having admitted its “mistake” in at least two cases of tax evasion.
The Income Tax department as well as the service tax department had detected tax evasions by Price Waterhouse, the audit firm. PwC had to settle the cases with both the departments after it admitted to making the mistake and paid the dues -- with interest and penalty.
“The question is not the amount of evasion, but the fact a top accounting firm, which provides tax advisory and audits the accounts, had involved in tax evasion is a matter of concern,” said a revenue department official.
The first case relates to writing back of gratuity provision and not paying tax liable on the same. The tax loss in this case was Rs 9.13 lakh.
Basically, any expenditure towards providing for gratuity is allowed as tax deduction under the Income Tax rules. However, when the same deducted amount was not utilised and written back, it would be counted as income and tax is payable on the same.
PwC, according to revenue department, did not enter the written back amount in the tax return for 2000-01 and therefore paid less tax.
The department had imposed 300 per cent fine on the said tax amount, which PwC had contested in the Appellate Tribunal. The Tribunal had lowered the penalty to 100 per cent of the tax amount.
In April 2007, PricewaterhouseCoopers had petitioned the department for compounding of offences for filing incomplete income-tax return for 2000-01.
When the department was contemplating to initiate further legal proceedings against the firm, PwC, in order to avoid any litigation and buy peace, moved an application for compounding offences, which means acceptance of offence and willingness to pay fine to avoid any legal prosecution.
A spokesperson for the firm had said then that “It was a human error, as even clearly held by Tribunal. Though negligible when compared to our total tax payments, we regret it.”
In the second case, the Delhi branch of the Service Tax department had detected a tax evasion by the firm in 2007. The firm had shown a huge amount under miscellaneous expenditures in the balance sheet. It was found that the firm had repatriated some money to its parent company overseas for certain services. But service tax was not deducted.
“The firm admitted guilt and paid taxes with interest and penalty running into crores,” said a senior revenue department official.
|
Content Guide
