Will aggressively defend against tax demand: IBM

Company has approached the Dispute Resolution Panel against the order of the Assessing Officer

US-based technology major IBM is contesting a claim of the revenue department which has increased the company's taxable income substantially to around Rs 11,000 crore.

"IBM does not agree with the tax department's claims and will aggressively defend itself through the appropriate judicial process," a company spokesperson said.

The company, according to sources, has approached the Dispute Resolution Panel (DRP) against the order of the Assessing Officer who had alleged under-stating of revenues by the US technology group.

This is the latest in a series of tax disputes being faced by major multinational corporations in the country. Among the major MNCs, British telecom giant Vodafone, Finnish handset maker Nokia and major oil company Shell are locked in tax disputes with the revenue department.

In case of IBM, the Assessing Officer is reported to have added back the sales reversal as income of the company, raising substantially the tax liability of the IBM.

The company has contested the claims of the revenue department and moved the arbitration panel.

Sources further said that the company is contemplating to moving the High Court over the issue.

IBM has extensive operations in India and is engaged in software development, outsourcing and research.

As for other firms, Vodafone is facing a tax liability of over Rs 11,200 crore, along with interest, on its 2007 acquisition of Honk Kong-based Hutchison Whampoa's stake in India's telecom major, Hutchison Essar.

Vodafone Group Plc's Chief Executive Vittorio Colao yesterday met Finance Minister P Chidambaram and is believed to have discussed the long-pending tax liability issue.

The Income Tax Department had slapped a notice on Nokia's Indian subsidiary for violating withholding tax norms since 2006 while making royalty payments to the parent company in Finland.

Nokia may have to exclude its Chennai plant from the USD 7.2 billion deal with Microsoft if tax issues facing the India unit are not resolved by next week.